JP Morgan has raised its earning estimates for Apple on the basis of "increasing confidence" in Apple's digital music business.
The investment bank even suggests that one reason for its confidence in Apple is the closed system approach which it maintains will help Apple "avoid profit compression".
The company said: "The success of Apple's digital music initiatives has been established, but its sustainability is still a hotly debated topic. We believe the potential profitability of Apple's music business is highly dependent on whether or not the company can maintain its dominance in the portable music player market and avoid profit compression from commoditization.
"Apple can avoid profit compression by maintaining its closed system approach, as well as technical and legal barriers to entry."
The firm raised the per-share earnings estimates for fiscal 2005 and 2006 to $1.48 and $1.91, from $1.28 and $1.53, respectively, reports Forbes.