Whether or not AAPL's reported sales are accurate or merely the latest manifestation of channel stuffing is irrelevant: what matters to the sellside is that upside momentum, at least for a few days, seems to be back in the biggest tech stock and the immediate result is quite predictable - the sellside resumes piling in and selling their axed exposure to clients. In other words, they are coming out with increased price targets on the stock, most notable this morning from Goldman which just hiked its AAPL target from $530 to $560.
Apple this morning announced that it has sold over 9 million new iPhone 5s and iPhone 5c units in the three days since launching the new devices on September 20, and we believe this exceeded investor expectations for approximately 6 million units (versus 5 million units last year). The company also said that it expects September quarter revenues and gross margins to come in at the high end of its guidance of $34-$37 billion and 36-37%, respectively.
We are raising our estimates as a result of this significant upside. In addition, while most investors seemed positively surprised by today’s news, we also heard from the bears on the story and we address some of their concerns in this note as well. For the September quarter, we are now looking for revenues of $36.96 billion and EPS of $7.85 as compared with our prior estimates of $35.05 billion and $7.31. Our iPhone unit estimate is now 32.04 million versus 27.68 million previously. For FY2014, we now expect revenues of $182.71 billion, iPhone units of 164.42 million and EPS of $44.11, up from $179.67 billion, 156.55 million, and $42.65 previously. We reiterate our Buy rating and raise our 12-month target price to $560 from $530.