Analysts across the board are advising investors buy Apple stock, noting good fourth-quarter results, strong future product line-up and increasing market share to shore up their proposition.
Analysts at UBS, Needham & Co, American Technology Research and Think Equity all issued positive guidance to clients last night.
Mac market gains just beginning
Analyst Charles Wolf at Needham & Co said: “The big news in the fourth quarter was the growth in Mac sales. Record-breaking shipments of over 1.6 million units were up 30 per cent year over year, about four times the market’s growth rate. At 8.7 million units, even iPod shipments easily topped recent estimates.”
He also observed that marketshare gains are coming in ahead of his expectations: “On the strength of the Mac’s forthcoming ability to run Windows applications, we thought 2007 would be a breakout year for Mac sales. We were wrong. The breakout appears to be already occurring,” he wrote.
The analyst – who predicted Apple could make massive marketshare gains as Windows users switch to Mac in order to take advantage of the dual-boot facility (Boot Camp) of Intel Macs – also observed: “The migration appears to be resulting from dynamics unrelated to the Windows-on-Mac phenomenon.”
Wolf holds a ‘Buy’ rating and a $90 price target on Apple stock. He predicts $22 billion in revenue for Apple’s current 2007 financial year. He did warn that market growth momentum may suffer if Windows users aren’t enthusiastic for Boot Camp on a Mac.
Microsoft recently revealed that it will limit the number of legitimate installs of Windows Vista to a maximum total of two machines per software license.
‘Flawless’ quarter – Wu
American Technology Research analyst Shaw Wu also holds a ‘Buy’ rating on the stock, citing a $92 price target.
“We believe Apple’s competitive advantages and growth prospects remain among the strongest,” he wrote, observing a “nearly flawless” September quarter for the company.
“Revenue, earnings per share, margins, Mac and iPod units were all above consensus expectations,” he said, adding that Apple’s decision to release “nearly full financials” suggests the company maintains confidence in its current management team.
“We believe that the Mac business is showing signs of re-acceleration with the Intel transition complete and that iPod demand remains healthy, despite fears to the contrary,” he added.
Wu predicts 2007 revenues of $22.5 billion.
Future growth is likely
Think Equity analyst, Jonathan Hoopes, said: “We believe Apple is ramped and ready to deliver plenty of holiday cheer as the important retail store metrics are pointed in the proper direction, that is, up and to the right.”
Hoopes expects more growth to come, pointing to Mac OS X, iLife 07, iTV and predicting an iPod mobile phone, a new iPod, flat panel TVs and digital cameras from the company in the coming months.
He also anticipates that Apple will make more effort to secure enterprise sales. Hoopes holds a ‘Buy’ rating on Apple stock with a $100 target price.
Reiterating previous statements, he said: “Never in the history of the PC has a company been better positioned to gain market share and improve profitability.”
Investors should “understand that Apple’s software holds the key to both share gains and margin expansion”, he stressed.
Buy Apple before Macworld
Investors are also being urged to buy Apple stock before January’s Macworld Expo takes place in San Francisco.
UBS analyst Ben Reitzes said: “We believe that Apple has many exciting new products in the pipeline with many set to hit in the first half of calendar year 2007.”
The analyst predicts new iPods, an extension of the iTunes movie sales service, and more, adding: “We remain confident Apple is working hard on innovating in the digital home and seems to still be a step ahead of the competition.”
Reitzes holds a $23.2 billion revenue estimate for the company.