Apple's Future, Like Its Products, Will Be Made in China (Update1)

The importance of China cannot be understated, said Channing Smith, manager of the Capital Advisors Growth Fund.

"China is very important, and China will be an enormous growth market. What I'll be interested in seeing is the sustainability, and I want to see if they can replicate what we've seen in the U.S. in other countries." Smith owns Apple, but isn't adding to his fund's position.

The growth in China is staggering, and as Apple brings China Mobile online, there may be more surprises ahead. Barclays Capital's Reitzes, who rates Apple shares "overweight," says the iPhone's China sales was the earnings report's highlight. He raised his price target from $730 to $750.

Piper Jaffray's Munster was stunned, saying the international story for Apple is just beginning. "Given Apple's commentary around China growing five times [year-over-year], our confidence that Apple can win with an iPhone in emerging pre-paid markets is greater than ever," he wrote in a note. Munster rates Apple shares "overweight" with a $910 price target.

Wall Street analysts such as Jefferies' Peter Misek and others had become fearful of slowing iPhone sales. Misek cut his second-quarter iPhone estimate to 28 million to 30 million units, based on comments from AT&T (T), and Verizon (VZ) on first-quarter iPhone activations. Misek rates Apple shares "buy" with an $800 price target.

Apple's China sales don't take into account the iPad tablet, which isn't yet for sale on the mainland. The company sold 11.8 million iPads during the quarter. Cook said Apple has expanded "a lot" in China, but there's plenty of room for it to be a greater opportunity.

And once the iPhone 5 is announced (many are expecting an October launch), China's importance will be even greater.

Shares of Apple are soaring in early Wednesday trading, up 9.9% to $615.56.

Interested in more on Apple? See TheStreet Ratings' report card for this stock.

--Written by Chris Ciaccia in New York

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