Jefferies Lifts Q1/FY12 Estimates on Apple (AAPL); Can Maintain Higher Margins Longer
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Price: $305.93 +0.22%
Rating Summary:
44 Buy, 29 Hold, 9 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
44 Buy, 29 Hold, 9 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Keeping the momentum going, Jefferies is raising numbers on Apple (NASDAQ: AAPL) this morning, saying the company has the ability to maintain higher margins for longer than the market realizes as its uses its massive cash hoard to become more vertically integrated.
"We believe Apple is deeply involved in the manufacturing and supply chain process down to the factory floor," analyst Peter Misek said. "We believe Apple is creating deep partnerships with a handful of suppliers in industries where it feels there is a competitive advantage (e.g., secure supply, secure lower price, achieve a technological edge)."
The firm believes Apple is leveraging its massive cash flow to fund suppliers' capex. Analysis suggests Apple is spending $3B+ in FY12 capex on these equipment purchases and $7B+ in FY13, but in return Apple is reducing its COGS by ~$1.4B (~84bp improvement to GM) in FY12 and ~$1.9B (~89-95bp improvement to GM) in FY13.
Misek believes Apple is funding a large portion of Samsung's Austin fab and is manufacturing the upcoming quad-core A6 app processor there. However, they believe Samsung is losing share of Apple's supply over time. In 2013, when Apple starts production of the A7, it will likely add TSMC (NYSE: TSM) as a supplier in addition to Samsung, he said.
The firm raised Q2 EPS from $9.07 to $9.51 and FY12 from $43.87 to $44.32. They kept its Buy rating and $599 price target.
For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.
Shares of Apple closed at $502.60 yesterday.
"We believe Apple is deeply involved in the manufacturing and supply chain process down to the factory floor," analyst Peter Misek said. "We believe Apple is creating deep partnerships with a handful of suppliers in industries where it feels there is a competitive advantage (e.g., secure supply, secure lower price, achieve a technological edge)."
The firm believes Apple is leveraging its massive cash flow to fund suppliers' capex. Analysis suggests Apple is spending $3B+ in FY12 capex on these equipment purchases and $7B+ in FY13, but in return Apple is reducing its COGS by ~$1.4B (~84bp improvement to GM) in FY12 and ~$1.9B (~89-95bp improvement to GM) in FY13.
Misek believes Apple is funding a large portion of Samsung's Austin fab and is manufacturing the upcoming quad-core A6 app processor there. However, they believe Samsung is losing share of Apple's supply over time. In 2013, when Apple starts production of the A7, it will likely add TSMC (NYSE: TSM) as a supplier in addition to Samsung, he said.
The firm raised Q2 EPS from $9.07 to $9.51 and FY12 from $43.87 to $44.32. They kept its Buy rating and $599 price target.
For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.
Shares of Apple closed at $502.60 yesterday.
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