Apple Inc. (NASDAQ:AAPL) shares continue to show volatility in the markets, dropping another 1.5 percent in early afternoon trading. Meanwhile research firm Sterne Agee has trimmed its revenue targets for the tech giant.
The research firm has checked with suppliers, and they do believe that the iPhone 5 and the gross profit margin will surprise investors on the upside because both supply and yields are continuing to improve. Lead times are now same day up to four days for the iPhone 5. However iPads will likely come in light because of supply constraints on the mini and also lower builds for the next generation of the iPad.
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The supply of the iPhone 5 is continuing to improve, so its profitability is increasing as well. This is good news for Apple Inc. (NASDAQ:AAPL) because the company is gearing up for international launches in more than 50 countries tomorrow. Stern Agee is increasing its iPhone forecasts to 47.5 million from 47.3 million units. The consensus for iPhone 5 units is 45 to 46 million. They are also reducing their expectations for iPad units to 23.5 million from 25 million.
Sterne Agee analysts do believe that shares of Apple Inc. (NASDAQ:AAPL) will remain volatile until the end of the year, but they expect that the stock will shift back to the fundamentals when next year starts. They note that this is the beginning of two major product cycles, which will likely last at least three quarters.
Stern Agee has placed a Buy rating on shares of Apple and has set its target price at $840 per share, which is certainly interesting in light of the fact that shares of the company are now trading around $530 per share and dropping.