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Apple: Sterne Agee Ups Ests; Says Street Worries Overblown

This article is more than 10 years old.

The Street continues to jockey for position ahead of Apple's March quarter results coming up on Tuesday after the close.

Sterne Agee analyst Shaw Wu this morning repeated his Buy rating and $750 price target on the stock, upping his estimates on the company. He thinks Mac sales could come in a little light of expectations for the quarter, but he thinks that strong iPhone and iPad sales will spur a "sizeable EPS beat" for the period. "We believe concerns over slowing iPhone and iPad momentum are overdone," he writes, advising investors to buy the stock on recent weakness.

"We had last raised our iPhone estimates in late March based on our checks of stronger than expected momentum due to the addition of China Telecom as a carrier and 21 additional countries carrying the flagship iPhone 4S," he writes in a research note. "Since then, our follow-up work indicates there is still room for upside despite consensus estimates moving up a bit. We believe concerns of Verizon iPhones coming in a little low are overdone. Keep in mind Verizon is one of what we estimate to be 150 iPhone carriers."

On the other hand, he does say that Mac sales are likely to be light of Street estimates, due to an inventory drawdown ahead of a potential product refresh, and some modest cannibalization from the iPad.

Wu thinks guidance for the June quarter could be less conservative than usual given the strong demand for iPhone 4S and ongoing iPad momentum. He's already ahead of the Street for the June quarter, projecting $37.6 billion and $10.08 a share, with the consensus at $37.4 billion and $9.91.

For the March quarter, he now sees iPhone sales of 29.5 million, up from 28.2 million. (That's still lower than some other estimates; Piper Jaffray's Gene Munster sees 33 million.) For the Mac, he goes to 4.3 million units, from 4.7 million. His gross margin forecast is 43.5%, up from 43.2%, and ahead of guidance at 42%, due to a favorable mix shift toward iPhone. He continues to see iPad sales of 12.3 million units.

The analyst now sees revenue for the quarter of $36.8 billion, with profits of $10.20 a share, up from $36.4 billion and $10. Consensus at $36.6 billion and $9.99. Guidance was for $32.5 billion and $8.50 a share.

AAPL this morning is down $3.23, or 0.6%, to $584.21.