American Technology Research analyst Shaw Wu yesterday reversed his previous downgrade on Apple stock on strength of increased distribution for iPhone.
Wu wrote: “We estimate that Apple's wireless subscriber opportunity will more than triple to c.470 million from c.150 million today.” The analyst raised his target price on the stock to $220.
The analyst observes the recent flurry of announcements from telecom firms confirming their intent to offer iPhone in their market this year. Vodafone, Telecom Italia, America Movil and Roger Wireless all last week revealed plans, effectively meaning Apple now has a much larger potential market for its device.
“We are raising our forecast for iPhone shipments to 11 million in 2008 and 17 million in 2009 (from 7 million and 10 million respectively),” the analyst wrote. “We still expect unlocked iPhones will be an important driver of units, but will likely trend lower as new carriers come on and the market shifts from early adopters to mainstream users. We estimate unlocked handsets will trend towards 25 per cent from the 55-60 per cent peak we estimated in the December 2007 quarter,” he added.
“We now forecast iPhone will become 9% of revenue next year,” Wu said, saying he’s now confident Apple will achieve its ten million unit sales target this year.
“For every 1 million incremental iPhone units (sold), we estimate $0.15-0.20 in incremental EPS, recognized over 8 quarters,” he added.
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