Apple (AAPL) Target Lifted to $130 at BMO Capital Following Q1 Results
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BMO Capital analyst Keith Bachman raised estimates and his price target on Outperform-rated Apple (NASDAQ: AAPL) to $130.00 (from $123.00) following strong results after the close.
Bachman noted the FX impact was material as he had expected. The y/y impact to revenue growth is approximately 4% in the December quarter and 5% in the March quarter. That said Ggven mix (particularly the iPhone 6 Plus), they think gross margins will, at a minimum, be at the high end of the guided range for the March quarter.
The analyst commented, "The most interesting comment from the call was that only a fraction of the installed base had upgraded to new iPhones. If we assume that the last 10 quarters of iPhones sold through the September quarter equates to the installed base, this would suggest ~375 million users. Management commented that only a small “teens %” had upgraded to iPhone 6 family. If we apply 12%, this would suggest about 45 million users had upgraded, whereas we believe that iPhone 6 sales since inception are closer to 75-80 million units. Hence, we if applied a 12% ratio to an assumed figure of 75 million iPhone 6 sales since inception, this would suggest a user base of closer to 625 million. We don’t think this is an academic exercise, since we believe the size of the installed base is important to yield future growth of iPhones. In other words, such a large installed base, with low upgrades to date, suggest the potential for strong iPhones sales in the next several quarters."
The firm is raiging FY15 EPS estimate from $7.97 to $8.65, and are raising our FY16 EPS estimate from $8.63 to $9.33.
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 $109.14 yesterday.
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