Apple Falls From Grace

Even with the lower guidance, some analysts raised estimates. Stice, who has a strong buy on the stock, upped his EPS forecast to 66 cents from 61 cents and raised his price target to $119 from $110.

UBS analyst Benjamin Reitzes added a penny to his EPS estimate, to 61 cents for the second quarter. For fiscal year 2007, he raised his EPS forecast to $3.20 from $2.87 and moved his target price to $124 from $118. Reitzes has a long common stock position in Apple, and his firm has provided nonsecurities services to Apple.

"Our estimates are above the company's guidance for the March quarter, with revenue of $5.2 billion and EPS of 64 cents," Prudential Equity analyst Jesse Tortora wrote in a Thursday note. He raised his price target to $100 from $90 and has a hold on shares. His firm owns more than 1% of Apple stock.

Still, it can be hard for analysts to accurately model profitability when the company is reluctant to give too many details on future products such as the newly-revealed iPhone and Apple TV, Thrivent's Grossman says.

"While they give us some information (on the quarterly conference call), there isn't a lot to chew on," he says. "That adds to some confusion."

Apple steamrolled over earnings and revenue estimates late Wednesday, reporting a profit of $1 billion, or $1.14 a share, for the first quarter compared with $565 million, or 65 cents a share, in the same quarter last year. Thomson First Call analysts had projected an EPS of 78 cents.

Sales added up to $7.1 billion, growing from $5.7 billion in the comparable quarter a year ago and easily topping the average analyst forecast of $6.42 billion.

"It's tough to quibble with anything they did during the quarter," Stice says.