Apple (AAPL) Price Target Raised at BMO Capital; Sees Unfulfilled iPhone 6 Demand Pushed Into March Quarter

BMO Capital analyst Keith Bachman boosted estimates and his price target on Outperform-rated Apple (NASDAQ: AAPL) to $123.00 (from $113.00) saying the March quarter also looks good given unfulfilled iPhone 6 demand.

The analyst believes about one-third to one-half of potential iPhone configurations are available for walk-in traffic at Apple retail stores, and more of the 6 Plus are currently available than were available a month ago. Bachman notes only limited iPhone 6 stock is available at third-party stores, and Apple is hoarding available supply, which should help Apple's gross margins in the December quarter. He sees Apple ending the December quarter with backlog, or unfulfilled demand.

"Last year, Apple ended the December 2013 quarter with about 15.3 million units of iPhones in the channel, and we think Apple will end the December 2014 quarter with fewer units in the channel," he said. "Therefore, we think iPhone channel fill will increase March 2015 quarter units by approximately two weeks, or 3-5 million units."

The firm is raising FY15 EPS estimate to $7.97 from $7.90 (consensus of $7.74), and FY16 EPS estimate to $8.63 from $8.24 (consensus of $8.54).

The new price target is 14-15x FY16 EPS estimate versus their previous target P/E multiple of 14x. Given that the December and March quarters could be peak growth quarters, they are reluctant to increase our target multiple beyond a 14-15x range, the analyst said.

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 $115.00 yesterday.

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