Cowen & Co.’s Matthew Hoffman Says Apple Expectations are Too High

Tiernan Ray’sTech Trader Daily blog on Barron’s cited Cowen & Co.’s Matthew Hoffman in an article today, which revealed that despite the analyst’s rating of “outperform” on Apple (NASDAQ:AAPL) stock, he warns investors that, “expectations are building to levels that leave little chance for a substantial revenue upside surprise when it prints fiscal Q1 results on January 24.”

Hoffman recently cut his estimate of iPad sales from 16 million to 14.9 million in the fiscal first quarter. Hoffman justified his move by referring to “macro headwinds” that he thinks might have reduced the holiday gift-giving of the device. He conversely raised his iPhone estimate from 26.5 million to 30.5 million. The analyst has also raised estimated total revenue for Apple to $40.6 billion, up from his original $38.5 billion and slightly over the general consensus of $38.62 billion. He also increased his EPS from $9.55 to $9.87, but is still under the average estimate of $9.95.

Hoffman feels that other analysts are getting carried away. Ray’s blog quotes Hoffman who said, “Some of our competitors are extrapolating those strong activations into global C4Q11 iPhone unit sales in the mid-to-upper-30 million range. We are raising our C4Q11/F1Q12 forecast to 30.5MM units from 26.5MM, but our checks do not support a figure in the mid-30s. Second-hand iPhone activations (from upgraders) and wider channel weakness may explain some of the delta.”

Here’s how shares of Apple are reacting to the news today:

Apple Inc. (NASDAQ:AAPL): AAPL shares recently traded at $421.46, down $1.78, or 0.42%. They have traded in a 52-week range of $310.50 to $427.75. Volume today was 497,572 shares versus a 3-month average volume of 14,590,000 shares. The company’s trailing P/E is 15.23, while trailing earnings are $27.68 per share.

To contact the reporter on this story: Ashley Cloninger at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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