Sharply lower prices for NAND flash memory are expected to drive first quarter earnings at Apple Inc. (AAPL) to $1.75, according to Citigroup’s Richard Gardner. This compares with both his prior, and the consensus estimate of $1.59 to $1.60 per share.
He expects second quarter guidance will be in line with consensus. This will lead to a rally in Apple shares, but a seasonal pullback in the first half of calendar 2008 is also anticipated, the analyst told clients in a note.
Mr. Gardner now expects Apple to ship 2.4 million PCs in the first quarter on “very strong flat panel iMac demand,” which represents a 49% year-over-year gain and 11% on a quarterly basis.
His iPod forecast declines by 1 million units to 24 million to reflect lower shipments of the iPod touch.
The analyst said that:
iPhone shipments could be a bit below the Street’s 2.5M estimate due to European consumers’ preference for 3G. However, this shortcoming should be remedied within 1-2 quarters.
Mr. Gardner reiterated his “buy” recommendation and $215 price target for Apple shares.
The company is expected to report results for the first quarter of fiscal 2008 on Jan. 22.
