This Analyst Has High Hopes for Apple

Credit Suisse is choosing to be ultra bullish on Apple (NASDAQ:AAPL) ahead of the iPhone maker’s December quarter earnings report in the coming week. According to analyst Kulbinder Garcha, the Wall Street consensus estimates for the company, especially the reduced earnings per share figure, are too pessimistic.

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Garcha is modeling $57.2 billion in revenue and $14.59 per share in earnings per share. According to Wall Street averages calculated by FactSet, Apple will post earnings of $13.45 a share, down from $13.87 a year ago. Revenue is expected to rise to $54.92 billion from $46.33 billion in the year-earlier period.

The analyst, who reiterates an Outperform rating on the shares along with a $750 price target, also predicts an average gross margin of 39.3 percent on 49.8 million iPhone units and 23.8 million iPad units, Barron’s said. According to Garcha, despite the introduction of several rival tablet devices from Apple’s competitors last year, the iPad would continue to maintain a majority share of the market for a while to come.

“Within the competitive landscape, we forecast Apple’s tablet share at ~59 percent in 2013 and ~50 percent long-term, though this may prove conservative given the company’s compute advantage, aggressive pricing, and superior margin structure,” Garcha wrote in a note to clients.

As far as the recent reports regarding cuts in iPhone component orders because of lower-than-expected demand for the smartphone go, Garcha is of the opinion that fears were unfounded. While the reports may have been accurate, they didn’t point to a demand problem, he said.

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“We believe the recent and consistent reports of iPhone order cuts are on balance accurate (i.e. that builds may fall 30-40 percent quarter-over-quarter in the first quarter of 2013),” he wrote. “However equally we believe that they are not reflective of end demand and are evidence of Apple ramping its supply chain more aggressively than the past as the product cycle accelerates.”

According to Garcha, strength in smartphone shipments at Verizon (NYSE:VZ) and AT&T (NYSE:T) and a fairly good launch weekend in China support his estimates.

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