Apple Inc. (NASDAQ:AAPL) looks to gain momentum in anticipation of strong sales during the holiday season starting today, Black Friday. Generally, the Cupertino-based technology giant offers a “one-day-only” discount for its products, including the iPads, iPods, and Macs, according to analysts at Barclays Equity Research.
Barclays PLC (LON:BARC) (NYSE:BCS) Equity Research analysts, Ben Reitzers, Ryan Jones, and Matthew Markezin-Press expect the available stock of the iPad Mini to be sold-out immediately. They do not expect Apple to offer aggressive discounts on Black Friday, due to supply shortage. Consumers would see similar discounts on Apple products offered during the previous Black Friday sales events of the company.
See table below: Apple Inc. (NASDAQ:AAPL) Discounts on Previous Black Friday Sales Events
Reitzers and his colleagues state that Apple Inc. (NASDAQ:AAPL) is expected to face strong competition against its own partners, such as Wal-Mart Stores, Inc. (NYSE:WMT). They note that the retail giant’s online store is offering the iPad 2 for only $399 with a $75 gift card. Some of Apple's selected retail stores are advertising the 4th generation iPod touch for only $195, compared with Apple store’s $199 price offering.
According to Reitzers, Jones, and Markezin-Press, Apple’s line of products in terms of MP3s, personal computers, and tablets still appears to be the strongest in the market.
The analysts perceived that Apple Inc. (NASDAQ:AAPL) products face a more serious competition against cheaper products from its competitors this year than last year. Some of the products include Google’s Inc (NASDAQ:GOOG) Nexus 7 ($199 starting price), Asus tablets ($399 starting price), Samsung Galaxy 10.1 ($299 starting price), and Amazon.com, Inc. (NASDAQ:AMZN)'s Kindle Fire tablets (Fire HD $199 starting price). Despite a strong competition, they believe Apple would be able to regain its market share in the tablet market this quarter with the introduction of the refreshed iPad, equipped with A6x chip, and the new iPad mini, even at a premium price.
Reitzers, Jones, and Markezin-Press estimated that Apple’s iPad unit sales would increase by 65.2 percent to 96.3 million (including 39 million iPad Mini sales) for FY13.
The analyst checked the production of Apple Inc. (NASDAQ:AAPL) suppliers in Asia. According to them, the production of iPhone 5 is improving. They projected that the Cupertino based company would be able to sell 50 million units of iPhone 5 this quarter, higher that their previous 43.5 million units expectation.
Reitzers and his fellow analysts believe, “there is still room to surprise investors with holiday sales momentum.” According to them, Apple’s momentum into the holiday season will be noticeable during this Black Friday sales event.
In their research note to investors, the analysts wrote, “We believe Apple’s valuation is attractive & that shares can continue to benefit from iPad & iPhone expansion, Mac share gains, international gains, & yet-to-be-announced products.” They also believe that Apple Inc. (NASDAQ:AAPL) deserves a higher multiple versus the group given, considering the fact that the stock is disrupting profit pools in traditional computing related sectors.
Based on the Global Technological Outlook published by Barclays PLC (LON:BARC) (NYSE:BCS) last November 15, Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG) are in a position to lead the transition of a “disruptive mobility” based on the critical mass of both company’s respective platforms.
Furthermore, the analysts estimated that Apple’s upside scenario is around $910 per share based on about 15x of their FY14 EPS estimate of $60.66, while the downside scenario is around $550 per share based on the law of large numbers due to aggressive competition in smartphone market, and high expectations based on 9x FY14 EPS of $60.66.