RBC Bullish on Apple: Strong Back-To-School Mac Sales; “Sustained iPhone Momentum”

Pounding the table on Apple (AAPL) Friday morning, RBC Capital’s Mike Abramsky reports that there are indications of “increased Mac momentum” in the back-to-school quarter. He says RBC’s “technology adoption panel” of 3,665 technology users found 17% bought a Mac laptop in the last 90 days, up from 12% in the prior quarter.

Abramsky expects Apple to ship 2 million Macs in the September quarter, which would be up 27% year-over-year and 16% sequentially. He sees fiscal fourth quarter revenue of $6.2 billion, which is above the Street consensus of $5.93 billion, with EPS of 76 cents, below the Street at 81 cents.

Abramsky also says that checks with Apple and AT&T stores find “sustained iPhone sales momentum.” He continues to see 1.5 million shipped by the end of the fourth quarter, which is above the 1 million Apple has forecast. He sees total shipments of 14.3 million by the end of calendar 2008. Abramsky expects European iPhone carrier partners to be announced next month, with shipment to start in the calendar fourth quarter.

One other thing Abramsky notes is that checks with large retailers fine that iPod cannibalization from the iPhone appears minimal.

Abramsky maintains a $175 price target on the stock. He says the recent 20% decline in Apple shares provides an attractive entry point for the stock. Today, with the market in a broad rally thanks to the Fed discount rate cut, Apple was up, closing at $122.20.

AAPL 1-yr chart

Comments

[Malkiel:]

Alas, I don't expect the market to accelerate back to where it left off last month. AAPL is at a golden moment as an anointed stock, but I believe it won't be able to overcome the flat market I expect for the rest of the year. Notice how the institutions unceremoniously dumped AAPL with the rest of the trash last week? Not an indication that they expect it to keep climbing against the market...

2007 Aug 20 11:18 AM

[Constable Odo:]

I pretty much agree with you. Apple got totally dissed along with the rest of the market. The European iPhone announcement will add a bit of momentum along with the imminent 6G iPods. Still, it will be a long, hard climb for Apple to get back to where it was a month ago. Apple will need a really big rumor to kick it up. Something stupid like two million iPhones sold during August and September. I'm not counting on anything. I merely pray it reaches $165 near the end of the year. Man, Apple don't get no respect.

2007 Aug 20 12:01 PM

[CARMEL:]

walk into any apple store and you'll be amazed at the activity and enthusiasm
ask friends and neighbors and you'll find additional support for the expandibng market share by aapl

oppie

2007 Aug 20 01:13 PM

[brewer:]

The 'institutions' and 'analysts' have been dead wrong about APPL for years now. Why would that change all of a sudden? A lot of folks were riding the iPhone wave, and they have hopped off. But it's not going to continue to fall in my estimation. (I am not a stock analyst.) Apple was in the 90's before iPhone, after all.

No one 'annointed' Apple, they have gotten where they are more desipte the constant dismissal of wall street rather than because of any 'annointing'. Where does anyone get that Apple is anointed? That is a bizarre statement.

If any companies are 'annointed' it's the PC companies. Look at Dell for example. They are having to restate all their earnings and still no drop. Meanwhile, Michael Dell has been begging to sell OS X because no one is really interested in Windows. He is trying to sell Ubuntu, etc.. good luck with that! Microsoft is in huge trouble over Vista, which no one outside of their PR department has anything good to say about. Still the stock has only gone down a few dollars over the flatline it's seen for years now. They continue to lose money on XBOX and Nintendo is killing them with Wii sales. No boost from Visa sales though, so what does that tell you?

Market is simply quick to judge and take profit from Apple. This will change eventually, but it takes a lot of time. 5 years of near 100 percent profits hasn't done it yet. :-)

2007 Aug 20 01:55 PM

[Neil Anderson:]

Good numbers for Apple, especially in the laptop department.

2007 Aug 20 04:03 PM

[Malkiel:]

The term "anointed" comes from Cramer, whose theory as a hedge fund guy is that harried hedge and mutual fund managers who have to do a lot of buying to do make life easy for themselves by deciding which stocks within a given quarter have solid up trends and ride those horses because they know all their competition will do the same, reliably buoying the price. (for mutual fund managers it's part of the quarterly "window dressing" process, where they want their shareholders to see names in the quarterly report that look solid and respectable). I believe in the concept, and it was pretty clear from the behavior of the stock in Q2-3 that Apple was one of the "anointed" (Cramer called Apple one of his "four horsemen of the apocalypse, ponies you could ride all the way to the end of the quarter).

Unfortunately, the horses have stumbled on the credit crisis and I wouldn't be surprised if the funds choose new ponies later in the year if the market recovers, regardless of Apple's fundamentals. It ain't fair brother, but it's the way the market works...

2007 Aug 20 04:55 PM

[East Coast:]

Of course Apple is the anointed stock. Sure the analysts have been wrong/running to catch up with it, but to say it has been spurned by Wall-Street is ridiculous. A stock does not move 80% over 52 weeks and 50% over 6 months if it doesn't have institutional buyers! The recent dip in price is more evidence of this and it's not because Apple is suddenly out of favor or because Wall-Street "hates" it now. It's because Hedge Funds have illiquid positions in their portfolio whose values have plummeted and they are facing margin calls and investor redemptions. In this situation, what does a manager do? He dumps the most liquid winner in his portfolio - da da! you guessed it - Apple, because he HAS to. Not because it's going to be a dog (too much fan support and market share to gain), but simply because he has to.

2007 Aug 21 09:27 AM