NEW YORK (TheStreet) –– As the holiday shopping season moves along, Apple (AAPL) continues to get love from Wall Street with JMP Securities the latest firm to boost its price target on the stock of the world's largest company. It's the fourth such price target boost in the past few days.
Analyst Alex Gauna boosted his price target to $150, keeping his "market outperform" rating following retail and online checks that revealed "powerful demand" for Apple products during the holiday shopping season.
"Even as the supply of iOS devices gradually improves and online ordering lead times have eased, Apple is continuing to sell out and/or seeing extended lead times for its highest-end iPhone and iPad offerings in the U.S. and China and we see this translating into positive implications for December quarter unit volumes, ASPs, and gross margins," Gauna wrote in a note. "We are also witnessing a lack of competitive momentum from key Android rivals that we believe should translate into further share gains for Apple in the December quarter, better entrenchment of the business model, and a wide-open opportunity for Apple to transform the wearables and mobile payment markets in 2015."
Guana now expects Apple to generate earnings of $2.62 a share in the quarter on sales of $67 billion. The estimate is based on sales 67 million iPhones, 25 million iPads and 5.5 million Macs. Analysts surveyed by Thomson Reuters expect Apple to earn $2.53 a share in its fiscal first quarter on $66.35 billion in revenue. When Apple reported fiscal fourth-quarter results, the tech giant said it expects to generate between $63.5 billion and $66.5 billion in revenue, with gross margins between 37.5% and 38.5%.
The iPhone 6 and 6 Plus have been in such incredible demand since they first became available in September that Apple has had trouble making enough units to keep up with demand, most notably demand for the larger, 5.5-inch iPhone 6 Plus. Guana believes that Apple has made inroads on getting supply increased, but noted that sources "have indicated that even Apple has been surprised by the strength of demand." On the fourth-quarter earnings call, CEO Timothy D. Cook said: "It's very difficult to gauge demand without first achieving the balance. And it's clear that as of today [Oct. 21], and certainly as of the end of the quarter where you're looking at the data, we're not nearly, we're not close, we're not on the same planet."
Not only is the iPhone 6 strong domestically, it's performing well in China, Apple's second-largest market. Helping Apple in China is the lack of demand for Samsung products, which largely use Google's (GOOGL) Android operating system. Guana also picked up on a note that China Mobile (CHL) , the world's largest mobile carrier, "reported further acceleration in its 4G subscriber adds, and we expect demand in excess of supply in China to extend that trend up through the later than typical Chinese Lunar New Year."
Not only does iPhone demand appear to be nearly insatiable, iPad demand appears to be reaccelerating following the launch of the iPad Air 2 and iPad mini 3. Guana noted the larger iPad Air 2 was sold out in 90% of the Best Buy (BBY) stores in cities like New York, Los Angeles, San Francisco, Chicago, Dallas, Washington, and others. He also noted the iPad mini 3 is "sold out in roughly half of these cities, and we observed strong sales velocity and/or high online Best Selling rankings for earlier generation iPads that have come down in price."
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-- Written by Chris Ciaccia in New York
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