Piper Jaffray’s Gene Munster, one of the most bullish — and closely watched — of the more than two dozen analysts who track Apple Inc., has raised his estimates for the company’s fourth quarter, which ends next Tuesday, Sept. 30.
Based on the latest retail sales data from the NPD Group, Munster writes in a report to clients issued Monday that he is “incrementally more confident” in Apple’s unit sales for its three main product lines and has raised his targets as follows:
- Mac units of 2.8 million (vs. 2.5 million previously) in Q4
- iPod units of 11 million (vs. 10.8 million)
- iPhone units of 5 million (vs. 4.1 million)
Added to the 2.4 million first-generation iPhones Apple sold in the first six months of 2008, that would bring the total number iPhones sold this year to 7.4 million.
Apple has repeatedly expressed confidence that it would sell at least 10 million iPhones in calendar 2008. Reports in early August that Apple’s Asian partners were turning out iPhones at the rate of 800,000 a week led some investors to speculate that the company might reach that goal before the end of September.
If Munster is right, either those reported manufacturing rates were wrong or production has slowed since August.
Munster also notes the iPhone this quarter will, for the first time, account for a “meaningful percentage” of booked revenue. Last quarter, which ended in June, the iPhone accounted for only 4% of booked revenue; this quarter, he estimates, it will account for 21%. To reflect this change, he is publishing a new metric that assumes that the full value of each iPhone sale is accounted for in the quarter in which it is sold (rather than spread out over two years, the life of the standard iPhone contract).
This new metric significantly boosts Apple’s earnings per share, at least on Piper Jaffray’s spreadsheets. For example, Munster on Monday increased his estimate of Apple’s fourth quarter earnings 13%, from his previous estimate of $1.04 a share to $1.17 a share (the Street estimate is $1.11 a share). But under his new metric, booked EPS would come in at $1.60 a share, up 15%. He summarizes these changes in the table at right.
Munster’s price target for calendar year 2009 remains unchanged at $250 a share (based on a booked EPS of $9.14 and a multiple of 27.4). That gives the stock considerable room for upside growth. Apple (AAPL) shares closed on Friday at 140.91, having traded as low as 121.5 the day before.