J.P. Morgan Holiday Estimates Lifted - More iPhones and Fewer iPads
J.P. Morgan analyst Mark Moskowitz recently issued a note to clients where he announced the revised estimates, noting that “Santa's sleigh needs more room for iPhones.” The firm’s previous estimate of 25.3 million units has now changed, predicting iPhone shipments of 28 million for the holiday quarter. He mentioned that U.S. carriers have been “surprised by the strong uptake” of the iPhone 4S, as well as the lower-price iPhone 4 and 3GS models. The older iPhone models are also expected to assist in Apple’s penetration in emerging markets like China.
If you compare results, Apple’s previous record
for iPhone sales came in the June 2011 quarter with 20.34 million iPhones. The company saw a sequential decline in iPhone sales in the September quarter (most likely due to consumers holding out for the “new” iPhone) but CEO Tim Cook is confident that the next quarter will set an “all-time” high for iPhone sales.
According to Moskowitz, sustained demand for the three current iPhone models (iPhone 3GS, 4, and 4S) will help push Apple’s revenues up to $38.69 billion with a $9.87 increase in earnings per share this quarter. The firm’s previous estimate stood at $37.26 billion with a $9.45 earnings per share. According to the Wall Street consensus, Apple’s revenue for the quarter should be at $38.02 billion and $9.78 earnings per share.
The analyst did however revise the investment bank’s iPad estimates slightly downward due to “limited uplift in build activity.” According to him, Apple will be shipping 13.0 million tablets, down from 13.3 million. He believes that Amazon’s Kindle Fire having “better-than-expected momentum with price sensitive consumers,” has had a small impact on the iPad, though he believes that customers will eventually be left “disappointed” with the Kindle Fire. In the longer term though, J.P. Morgan expects the iPad’s retail momentum will continue to accelerate.
As far as Mac’s go, J.P. Morgan estimates remain steady at 5.4 million units. Moskowitz believes that MacBook Air momentum will remain strong without receiving major competition from Intel’s Ultrabook specification. It is also likely that Apple won’t be affected by the hard-disk drive shortage that will be impacting the broader PC market. Apple shares remain a top pick for J.P. Morgan, which currently rates the stock as Overweight with a price target of $525.