Apple (NASDAQ:AAPL) is seeing material improvements in yields of components for the next-generation iPhone and could sell more units of the device than previously estimated, Pacific Crest analyst Andy Hargreaves has said. Hargreaves reiterated an Outperform rating on shares of the company as well as a $690 price target in a note to clients.
“Our most recent round of supply checks suggest iPhone 5 component supply is improving meaningfully,” Hargreaves wrote. “More specifically, we believe yield rates from in-cell panel makers have improved, which should support increased iPhone 5 production capacity in FQ4 (September) and FQ1 (December).”
The analyst said there could be 20 million more units of the smartphone sold this year than his previous estimate of 163 million and that the possible upside for the stock because of that could come to between $720 and $750. He concluded that there was a possibility that Apple could end up earning $5 in extra earnings per share in fiscal 2013 on top of his existing $55.09 estimate.
Hargreaves added that he thinks Apple can ship four or five million units of the new model this quarter along with 20 million units of the existing models. He sees 50 million units of the next-generation iPhone being manufactured in the December quarter, higher than his previous figure of 43.7 million, and even more than that in the March quarter, also higher than his previous model of 43.2 million.
The analyst is also bullish in his new projection for sales of the rumored iPad Mini. Hargreaves wrote that Apple may ship 10 million units of the smaller tablet in the December quarter to add to the 15.5 million units of the existing model.
“We believe Apple’s touch-panel suppliers are experiencing modest yield issues trying to improve the responsiveness of the glass-film touch panels for the anticipated 7.85” iPad Mini,” he wrote. “However, these do not appear significant enough to drive anticipated supply below our expectations.”
While sales of the iPad in the current quarter may fall off as people wait for a newer model, the analyst is not very worried.
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