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Apple Estimates Raised on iPhone Strength (Update 1)

Stocks in this article: AAPL FB

Updated from 9:03 a.m. EDT to provide analyst comments regarding second-quarter guidance in the sixth paragraph.

NEW YORK ( TheStreet) -- It hasn't happened often recently that an analyst raises his estimates on Apple (AAPL), but one such brave soul has done just that.

Canaccord analyst T. Michael Walkley raised earnings estimates on Apple due to stronger iPhone 4 and iPhone 4S sales.

"Our March quarter global handset surveys indicated the iPhone 5, 4S, and 4 maintained leading share of the high-end smartphone market with improving supply and a stronger mix of iPhone 4 and 4S sales than our expectations," Walkley wrote in a note. He raised his full year 2013 and 2014 estimates for Apple as a result, with 2013 earnings moving to $43.86 a share, up from $43.59 a share. Walkley's fiscal 2014 earnings estimates were bumped up to $50.16 a share from $50 a share.

Analysts polled by Thomson Reuters expect Apple to earn $44.05 a share in 2013, and $49.64 a share in 2014, so Walkley is in line with the consensus.

Walkley raised his iPhone estimates in the March quarter to 37 million units from 34.5 million units. The June quarter also was raised to 27 million units, up from 25 million. There was one caveat, however. The analyst, noting that the lower-priced iPhone 4 and 4S are showing strong sales, lowered his average selling price estimate on the iPhone to $601 for the March quarter, down from $651.

He expects revenue for the March quarter to be $43 billion, with Apple earning $10.04 a share. His estimates for the June quarter are seasonably weaker; he estimates Apple will generate $36.8 billion in revenue and earn $8.07 a share.

Though earnings estimates were raised, not all is well for the iPhone maker. Walkley said he believes that with the upcoming iPhone 5S refresh, as well as the recent Samsung Galaxy S4 launch, Apple "could lose meaningful near-term market and profit share" prior to the eventual iPhone refresh.

Recent data from analytics firm comScore noted Apple gained market share in the three months ending February, owning 38.9% of the U.S. market. Samsung came in second, with 21.3% of the market, followed by HTC, which owned 9.3% of the market.

HTC recently partnered with Facebook (FB) to bring the first phone with Facebook Home to the U.S. market; the phone is due April 12. Facebook Home is built on top of Google's (GOOG) Android operating system, which is still the leading operating system in the U.S., owning 51.7% of the market, with Apple's iOS coming in second.

Apple is expected to update its iPhone later this summer, as it seeks to recapture lost momentum in certain consumers' eyes.

Shares of Apple were slightly higher in early trading Monday, up 0.31% to $424.51.

-- Written by Chris Ciaccia in New York

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