Apple Inc. (NASDAQ:AAPL) rose as much as 3.5 percent after analysts at Raymond James upgraded the stock to a strong buy from an outperform rating. The firm also adjusted its earnings per share estimates for currency.


Apple As An Investment Into Mobile

Raymond James analysts Tavis C. McCourt and Daniel Toomey issued a report to investors today saying that they believe the company’s “near-term financial trends will stabilize and then improve” after its June quarter. They see Apple Inc. (NASDAQ:AAPL) as “an investment into the mobile computing revolution.

The analysts said phase one of the revolution as they see it is now maturing, and phase two has just begun. They include the smartphone and tablet markets in phase one, and they said the maturation of these two markets is marking the end of phrase of the mobile computing revolution.

Apple’s Place In Phase Two

They see phrase two of the revolution as the expansion of smartphone chipsets and ecosystems into automobiles, televisions appliances and “probably uses not currently thought of for computing devices.” They believe that since Apple Inc. (NASDAQ:AAPL) dominates high income consumers and because it has a vertically integrated model which they predict will make it easy for the company to take the biggest profit share as the mobile computing revolution moves into phase two.

Raising iPhone Estimates

Raymond James said that unlike others, they are actually raising their iPhone estimates. They said even though the smartphone market is maturing, they believe that the trade-in programs are keeping Apple Inc. (NASDAQ:AAPL) strong in the U.S. They actually raised their iPhone unit estimate for the June quarter from 27 million to 28 million units.

Overall, in the near term and year over year, they expect that Apple Inc. (NASDAQ:AAPL)’s trends “will be choppy,” but they say that the trends in revenues and earnings per share are upward and that believe the company’s user base is growing about 30 percent year over year.

Earnings Per Share Estimates For Apple

The analysts said they raised their earnings per share estimate for the June quarter very slightly to $7.89 per share. They kept their fiscal year 2013 earnings per share estimate the same at $40.11 but slightly lowered their fiscal year 2014 earnings per share estimate to make up for the margin impact of currency price moves. Their new 2014 earnings per share estimate it $46.13 per share.

The analysts note that right now, Wall Street’s view of Apple Inc. (NASDAQ:AAPL) is bad, but they see that as a good thing for the stock.

“Sentiment is bad,” the analysts wrote. “Make that horrible, in the institutional investor community, they said, but ultimately they see it as “feedstock for outperformance.” In addition to upgrading Apple Inc. (NASDAQ:AAPL) shares to a strong buy, they also maintained their $600 per share price target for the stock.