Apple Inc. (NASDAQ:AAPL) will announce its C3Q12 on October 25, which comes just over six weeks since the launch of the new iPhone 5. The iPhone maker received numerous increases in Price Target a few days before the launch, and after the launch, some companies put a target of $1000 per share. BMO Capital placed a price target of $750 per share, but now, it seems as though the equity research firm is now losing some love for Apple Inc. (NASDAQ:AAPL), and has consequently reduced its price target for the tech giant by $20, to $730 per share.
The analysts cite iPhone 5 supply constraints as a major factor, while they expect iPad units to be more than their initial estimates. However, BMO capital markets analysts have increased their Q3 estimates for iPhone sales, while lowering the December quarter guidance estimates, well as the guidance. The analysts have also increased their estimates on revenue, EBITDA, and EPS for the September quarter.
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According to BMO’s new estimates, CPUs and iPods remain unchanged, while iPhone sales are up by 1 million units. iPad sales are down by 300,000 units, while the overall revenue is expected to be about $35,749, as compared to the initial estimate of $35,316 billion. Additionally, earnings per share will stand at $8.84, as compared to $8.70, while the gross margin remains unchanged, at 41%.
BMO capital has revised downwards, estimates for CPUs, iPods and iPhones, while iPad estimates have been increased from 82 million to 92.5 million sales units. This is mainly due to the prospect of the new iPad mini. However, the huge downward revision of iPhone sales units from $183 million to $170 million, is a major factor for the reduced revenue and EPS estimates.
Nonetheless, the company’s revised estimates on Apple Inc. (NASDAQ:AAPL) revenue lie above the street average of $193.96 billion, while the EPS of $52.65 is slightly lower, as compared to $53.27 of the street.
BMO Capital analysts believe that investors are focusing more on the company’s long-term future, as compared to, Q3 earnings. They claim that investors are focused on the second derivative for growth turning negative in the June quarter, and they also believe that Apple faces the “pig through the python” risks in full year 2013. Apple Inc. (NASDAQ:AAPL) will likely launch another iPhone around September 2013, and this is likely to hamper sales of the new iPhone 5, just as it was witnessed sometime this year, in the case of iPhone 4s, and iPhone 4.
The analysts view some growth opportunities for the tech giant in its TV/set-top box, and more fee-based business, which they believe can be grown with iCloud, iAd, and Passport/mobile wallet, among other areas of its business. Additionally, Apple’s move to lower pricing on older models of the iPhone, are also likely to expand the company’s sales to different geographical locations, especially in the emerging markets.
Overall, the company maintains a conservative guidance for Apple Inc. (NASDAQ:AAPL)’s December quarter, claiming that supply constraints will cause guidance to be conservative and materially below the consensus estimates. They believe that Apple will guide the December revenue in the range of $45 to $48 billion, which still falls below their new estimate of $54 billion, and the consensus estimate of $54.8 billion.
Apple Inc. (NASDAQ:AAPL) has proven to be a company that is full of surprises. However, I will surely, be surprised, if it pulls off another surprise in its Q3 earnings results, and its guidance for Q4.