Apple's stock is gaining on news of high demand for iPod shuffles and Mac mini's – though stocks are in short supply.
The stock rose to a 52-week high following upbeat comments by a UBS analyst on the computer maker's new lower priced Mac mini computer and iPod shuffle, writes MarketWatch.
UBS polled Apple's retail stores and other retailers and found that "Apple's momentum continues – even into its seasonally slow second quarter and is getting set to build again throughout this calendar year with new products and retail expansion," according to UBS analyst Benjamin Reitzes.
He added: "Our checks indicate that the company is seeing a very solid reception for the new Mac Mini and iPod Shuffle, as well as strong sales of new PowerBooks."
Piper Jaffray analyst Gene Munster also said demand for the iPod shuffle has been "very strong," but none of the resellers the analysts spoke with had received any shuffles to date, writes Forbes.
Piper Jaffray also noted that demand for the Mac mini "appears to be strong, but not overwhelming." Resellers suggested that higher demand would be seen if Apple increased its marketing of the product. According to the analysts: "Many resellers believe Mac mini demand will not significantly accelerate until Apple increases marketing for the product, which resellers expect will begin when Apple has sufficient supply."
UBS expects these shortages to be alleviated. Reitzes said: "While both of these products are being met by shortages, our sources indicate that these should be alleviated by next month, in time for the end of Apple's fiscal second-quarter 2005."
As a result Reitzes has raised his fiscal second-quarter earnings estimate for the company to 45 cents a share, up from 41 cents previously. This is based on a 67 per cent year-over-year gain in sales to $3.19 billion.
He increased his earnings expectation to $2.15 per share for the entire year, from an earlier estimate of $1.95 a share. He also lifted his 2005 sales estimate to $13.7 billion, a 65 per cent rise from 2004. The previous estimate was $12.8 billion.
Reitzes raised his 12-month price target for Apple stock to $99 from $85 previously.
Piper Jaffray also stated that the current valuation of the stock is "not outrageous based on three-year historical average."
Piper Jaffray said shares are currently trading at 34 times the 2006 earnings-per-share forecast of $2.40 while the average forward price-to-earnings multiple for Apple has been 43 times.
"While these multiples may have been based on significantly lower EPS estimates and expectations for future leverage via operating margin expansion, we would also note that these multiples were not factoring in the explosive growth we have seen as Apple has transformed into both a computer hardware company and a provider of products for the consumer digital hub," Piper Jaffray said.