UBS raises Apple to buy, ups price target 56 pct
Oct 2 (Reuters) - UBS upgraded Apple Inc (AAPL.O) to "buy" from "neutral" and raised its price target on the stock by 56 percent and its iPhone estimates for fiscal 2010 by 39 percent.
The brokerage expects the growing installed base of iPhone users, combined with the stickiness of the App Store, to drive a recurring hardware revenue stream.
Continued iPhone expansion driven by new partnerships are also expected to help iPhone hardware revenue, analyst Maynard Um said in a note to clients, and raised the price target on Apple stock to $265 from $170.
Um raised iPhone estimates for fiscal 2010 to 36 million units from previous expectations of 25.9 million.
The analyst expects Apple to post a strong quarter with potential upside to Street estimates and believes the December quarter should also see strong growth helped by seasonality and operator competition in some regions.
"We are less concerned with regard to margin pressure as demand does not appear to be shifting to the $99 iPhone 3G and a lower end 3GS does not appear to be forthcoming, as we had originally feared," Um said.
Separately, Morgan Stanley raised its price target on Apple stock to $210 from $200, saying it sees broader distribution as the most significant near-term catalyst for iPhone units.
"Although timing remains uncertain, we believe the near-term opportunity is in Europe, China and Korea, with the longer-term opportunity in the U.S.," analyst Kathryn Huberty said in a note to clients.
"We view the combination of new product launches, broader distribution and more attractive pricing as demand drivers over the next two years," she said.
Shares of Cupertino, California-based Apple were up 69 cents at $181.55 in trading before the bell. They closed at $180.86 Thursday on Nasdaq.
(Reporting by Shrutika Verma in Bangalore; Editing by Unnikrishnan Nair)
((shrutika.verma@thomsonreuters.com; within US +1 646 223 8780; outside U.S +91 80 4135 5800; Reuters Messaging shrutika.verma.reuters.com@reuters.net)) Keywords: APPLE/RESEARCH UBS
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