Why Apple's Getting a Boost (Update 2)
Updated from 10:52 a.m. EST to include CNBC comments from Carl Icahn.
NEW YORK ( TheStreet) -- Apple's
Goldman Sachs analyst Bill Shope raised his price target on Apple to $635 from $620 due to higher earnings estimates for the upcoming quarterly results, due to higher iPhone and iPad sales. He also cited increased confidence around the March quarter, due in large part to the China Mobile
AAPL data by YCharts
Apple signed the deal with China Mobile in late December, right before Christmas. This allows China Mobile's more than 760 million subscribers, including its lucrative 140-million 3G customers, access to Apple's latest iPhones, the iPhone 5s and iPhone 5c.
"Our upward revisions for the December quarter are largely driven by better-than-expected mix for both iPhones (5s versus 5c) and iPad (air versus mini), and our increased confidence in the March quarter is largely driven by the China Mobile iPhone launch on January 17," Shope wrote in his report. He now expects Apple to earn $14.29 per share on $58.54 billion in revenue for the holiday quarter, and $11.00 per share on $45.92 billion in revenue for the March quarter. Analysts surveyed by Thomson Reuters expect Apple to earn $14.09 per share on $57.45 billion for the fiscal first-quarter and $10.89 per share on $45.92 billion for the fiscal second-quarter, respectively.
In those figures, Shope expects Apple to sell 56.67 million iPhones, with the iPhone accounting for $32.53 billion in revenue during the December quarter. For the March quarter, he expects 45.81 million iPhones shipped. For the iPad, he expects 26.4 million iPads shipped during the December quarter, accounting for $12.9 billion in revenue, and 20.88 million during the March quarter. With regards to Mac sales, he expects 4.41 million Macs for the December quarter, and 3.85 million for the March quarter. He also expects 8.24 million iPods sold during December, and 4.12 million iPods sold during the March quarter.
Aside from the usual focus on revenue, earnings and product sales, Apple's gross margin is likely to come in to play. During Apple's fiscal fourth-quarter earnings , there was some confusion about Apple's gross margins, which the company said would be between 36.5% and 37.5%. The company later said it would defer $900 million in revenue due to the change in the way it hands out software, which accounted for 150 basis points worth of margin.