Apple Profit View Raised at BMO

BMO Capital Markets has raised its profit estimates of Apple Inc. (NASDAQ:AAPL) saying the Cupertino, Calif.-based technology giant would benefit from material upgrades of Sprint customers.

More specifically, based on our conversations with Sprint sales reps, we believe that Apple is benefiting from material upgrades of Sprint subscribers, BMO Capital Markets analyst Keith Bachman wrote in a note to clients.

The analyst raised fiscal 2012 earnings estimate to $34.68 a share from $33.50 a share, while analysts polled by Thomson Reuters are expecting Apple to earn $34.79 a share for fiscal 2012.

Bachman also increased first quarter iPhone shipment estimates to 29.5 million units from 28 million units. Hence the brokerage also raised its first quarter revenue forecast to $38.3 billion from $37.5 billion, and earnings estimate to $9.82 a share from $9.55 a share. Analysts expect earnings of $9.83 a share on revenue of $38.17 billion for the first quarter.

We believe that iPhone sales will be around 30 million, consistent with our past writings. However, we believe that new sales from Sprint and KDDI could add a few million units to iPhone sales, such that we believe shipments for the December Q will be around 29-32 million units, said Bachman.

We note that Sprint's total subscriber base is roughly half of both AT&T and Verizon. In addition, in the first quarter of new iPhone launches, Apple shipped about 3-4 million units to AT&T and about 2 million units to Verizon. Therefore, a few million more units in iPhone sales from the combination of Sprint and KDDI represents upside tension to our model, added Bachman.

The analyst has also raised price target on Apple stock to $460 from $455. Shares of Apple closed Wednesday's regular trading session at $402.64.

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