Analyst BackCheck: Piper's Munster on Apple

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 |  About: Apple Inc. (AAPL)
by: Research Recap

Munster-GeneAs an important source for Apple (NASDAQ:AAPL) investors and the media,Eugene Munster, Piper Jaffrey’s managing director and senior analysthas been covering the silicon valley firm since 1995. His price target calls, sales projections and other forecasts are closely watched, but the question is: are his predictions on target?

While many had been predicting a tablet computer from Apple as early as 2008, Munster accurately forecasted the launch of the iPad almost a year before its launch when he said last May ” Apple’s next step in mobile computing will likely be the release of a touchscreen tablet featuring a 7-to-10-inch display sometime in the first half of 2010″

Then in January, he estimated that the average selling price for the iPad would be around $600-$800. That proved to be more accurate than analysts who were forecasting prices of around $900-$1000.

He also called “2010 The Year of the Mac” as he expected Apple computers sales to exceed expectations after a slow year during the financial crisis. His fiscal first quarter Mac sales estimate of 3.1 million proved to be quite close as the company sold 3.36 million units. He had also increased the stock price target to $279 from $277.

Munster noted in late January that Apple’s revenue guidance was higher than his firm’s estimates for only the third time in 15 quarters since typically, Apple gives extremely conservative guidance that is mostly disregarded by Wall Street.

However, back in early April, Munster contributed, a bit embarrassingly, to the iPad frenzy a day before Apple launched the new device. He boldly stated that Apple was going to sell 600,000-700,000 units on the first day. But Apple sold about 300,000 iPad units on day 1, a good number, but only half of Munster’s prediction.

Munster had to admit that “we were wrong” as other analysts wondered how he and his team reached such a projection. Munster then lowered his 2010 iPad unit sales estimates from 5.6 million to 4.3 million, which was still above his pre-weekend projection of 2.7 million. “The bottom line is that we missed the launch day sales, but we remain confident in the iPad as an investable theme.”

In Mid-April, he raised Apple’s price target to $299 from $287. He was again bullish with his second quarter estimates, consistently stating that Apple’s earning will beat the street’s expectations. He was certainly right as Apple released a blow-out second quarter, and announced that Mac sales did go up as it hit 2.94 million units, higher than the 2.7 million consensus. iPhone sales also came in much higher than what the street had expected: 8.75 million vs. the 6.8 million consensus.

He said that while Apple shares will likely trade up following the March results, he believes additional upside remains as the iPhone business continues to flourish. He maintains his Overweight rating and raised his price-target to $323.

But as bullish as Munster is, a few other analysts have an even higher price target for Apple. On the high-end:

Mike Abramsky, RBC: Outperform, TP $350

Peter Misek, Canaccord Adams: Buy, TP $325

Chris Whitmore, Deutsche Bank: Buy, TP $325

On the low-end:

David Bailey, Goldman Sachs: Neutral, TP $270

Katy Huberty, Morgan Stanley: Overweight, TP $275

According to Thomson/First Call the median analyst target is $312.50. Apple is currently trading around $259 and has ranged from about $119 to $272 over the past year.

Alacra Pulse Analyst BackCheck Verdict: Green – despite the iPad gaffe, Munster’s overall record merits the attention he gets.

Sheena Lee

(Sources: Wired, MacDaily, TBI Research, AppleInsider, StreetInsider, Business Insider, Bloomberg, Seeking Alpha, Silicon Alley, as curated by Alacra Pulse.)