Apple Impresses Analysts with Tuesday’s iPad Event
Apple (NASDAQ:AAPL) held its highly anticipated iPad launch event in San Francisco Tuesday, and helped elucidate why the occasion’s invitations simply stated, “We still have a lot to cover.” The tech giant stayed true to its word and unveiled a handful of new Apple products at the October 22 event, leaving few if any, consumers, investors, and analysts disappointed.
Cantor Fitzgerald’s Brian White was one analyst lucky enough to attend the special event, and he maintained the firm’s price target of $777 in his note to investors at the end of the day. White came away from the event, confirming that Apple’s iPad refresh was its most significant since the orginal iPad went on sale in April 2010, just like he previously forecasted, and the analyst maintained his prediction that this will be a major upgrade cycle for the Apple tablet.
White was impressed with the next-generation iPad 5, the iPad Air, and even explained, “We believe this new iPad is worth this name change.” He detailed that the 7.5-mm tablet is 43 percent thinner than its predecessor, and it is even leaner than the firm’s estimate of 8.0 mm. The analyst was also impressed by the iPad Air’s weight of only 1 pound, and confirmed his expectations of the device coming with the new A7 processor, similar to that powering the popular iPhone 5S.
As for the iPad mini with Retina display, White cited rumors of supply issues that account for Apple’s later launch of the iPad mini, but didn’t predict whether the later shipping date in November would hurt the smaller iPad’s sales. Piper Jaffray’s Gene Munster, on the other hand, also expressed satisfaction with the special event, and maintained the firm’s Overweight rating with a price target of $640 for Apple.
Munster believes Apple’s pricing of the iPhone 5C coupled with that of the raised price of the iPad Mini with Retina display reflects the company’s focus on gross margin, and forecasted that Apple’s near-term gross margin will be stable in the 36-38 percent range, but maintained, “Aside from the margin detail, we believe the new iPad gives us comfort that growth can reaccelerate in the December quarter.”
In addition, the analyst also noted the iPad 5 name change, and predicted that the application of the Mac nomenclature to the iPad could purposely leave room for a “Pro” model at some point if Apple eventually sees a demand for a higher performance tablet.
Munster also highlighted the higher price of the retina Mini of $399, compared to the iPad Mini’s prior $329 price tag, but predicted that the existing iPad Mini will help Apple compete better in the 7″ tablet market that is already populated by devices such as the Nexus 7 that boast lower price points of $229. The analyst was happy with the iPad sales figures that Apple announced at the event, and he maintained his confidence that the new iPhone and iPad will help each other meet sales expectations.
Lastly, Maynard Um from Wells Fargo Securities also wrote a note to investors following the Apple event, and confirmed his belief that the Cupertino, California-based company will go into the holiday season with “more attractive price points.” Um was surprised by Apple’s announcement that upgrades to OS X Mavericks will be free, along with free iLife and iWork suites for new iOS and Mac purchases, but the analyst believes that the decision reflects a goal to drive more usage and also greater ecosystem loyalty.
The firm was also impressed with Apple’s noted iPad sales, and wasn’t disappointed with the iPad’s “much-needed upgrades.” Um concentrated more on Apple’s Mac and Macbook updates than the aforementioned analysts did, and noted that the powerful new notebooks both come at attractive price points, and the MacPro will likely become the new standard for multimedia editing.
Here’s how Apple traded on Wednesday:
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