Apple Inc.’s big announcement is tomorrow, but some analysts are already getting excited about the iPhone 5 announcement. In a report released tonight, Mizuho Securities announced that it is updating its price target on Apple from $725 to $750 a share. Shares of Apple closed today at $660.59. Mizuho Securities is basing the upgrade based on iPhone 5 sale expectations.
Mizuho is adjusting their estimates ahead of Apple Inc. (NASDAQ:AAPL)’s expected product launch tomorrow. The company is expected to announce the iPhone 5, which will likely be available later this month. Mizuho is raising their iPhone forecasts for September while lowering the estimates for the December quarter. Our C2H12 forecast remains the same. For iPads, they do expect the iPad Mini to be available during the holiday season though the announcement might not accompany the iPhone launch. They expect the iPhone 5 to drive a significant upgrade cycle.
Mizuho checks indicate that the in-cell display production, which remains the bottleneck, is ramping up but it could take another couple of months for yields to improve meaningfully. They expect Apple Inc. (NASDAQ:AAPL)’s ability to sell iPhones during the holiday season to remain constrained by its ability to produce instead of end demand. Given the September launch of the device, they are adjusting forecasts for C3Q12 and C4Q12 while maintaining C2H12 estimates at about 70M units. Their new September forecast now calls for 25M iPhones vs. 21M previously, of which the iPhone 5 could contribute about 5M units. For December,they now expect 46M phones vs. 51M previously. They believe there is upside to our forecast if Apple Inc. (NASDAQ:AAPL) is able to resolve display production yield issues.
While the announcement for the iPad Mini might not accompany the iPhone 5 launch, the analysts do expect the device to be available during the holiday season. Therefore, they are adjusting their iPad shipment and ASP estimates as well. Mizuho now
expect about 19M iPads in C3Q12 vs. 20M previously and their ASP for the December quarter moved down from about $515 to $460 as they are expecting the new tablet to be priced ~$250. The changes to their estimates are summarized in the above chart.
In Reiterating Buy rating and raising their PT to $750 from $725. They believe the iPhone 5 will be one of the biggest product cycles for Apple. For the last couple of quarters, the company has been experiencing a slowdown in iPhone shipments in anticipation of the new device and now expect strong uptake during the holiday season. The stock has performed extremely well so far (up 65% YTD vs +14% for the S&P500 or up 8% in last month vs +2% for the S&P 500) and there could some selling on the news, but Mizuho believes that in the long term the stock is a buy.
(Disclosure: no position in any companies mentioned)