Strong Mac, iPod sales power Apple shares as investors anticipate new product launches in 2007

“Apple shares have been on a tear the past few months, and with holiday shoppers feverishly snapping up more Macs and iPods, the company’s stock looks like a sure bet to cross the $100 mark,” Katie Dean reports for TheStreet.com.

“Bullish analysts have been raising targets and repeating their buy calls, even as shares are resetting 52-week highs. Since Apple last delivered its quarterly numbers on Oct. 18, the stock has shot up more than 23%. Shares closed Thursday at $91.66,” Dean reports.

Dean reports, “Analysts are enthusiastically expecting continued share-gains for the Mac computer, strong iPod sales over the holidays and a slew of new products in 2007, some of which will debut in early January at Macworld — the Apple faithful’s annual lovefest.”

“Interestingly, despite the stock having doubled in just over a year, by historical standards the shares are still relatively cheap. As of Thursday’s close, Apple was trading at 33.6 times the forward 12-month Thomson First Call consensus earnings estimate. According to Richard Stice, an equity analyst with Standard & Poor’s, the P/E ratio has averaged 42.2 on a monthly basis over the past two years,” Dean reports.

“Growth in Macs will be an important catalyst in the coming year, observers say. For its fourth quarter, Apple surprised the Street with its robust Mac sales, which grew 30% year over year to 1.6 million units,” Dean reports. “Worldwide, PC shipments are expected to be up 10% this year, says Stice, and Apple has been growing at an even-faster clip.”

“‘Our checks indicate continued strong demand for Macs and iPod, implying further potential for revenue and EPS upside,’ Bear Stearns analyst Andrew Neff wrote in a Wednesday note. ‘Strong initial uptick and popularity of [the] iPod shuffle could drive iPod unit upside, although lower-end mix could result in lower [average sales price] and mitigate the magnitude of revenue upside.’ However, even purchases of the cheaper iPods can pay off for Apple, as it can be a gateway to more spending later, says Think Equity’s Jonathan Hoopes,” Dean reports.

Dean reports, “Early indications are that 2007 will deliver: The company’s rumored iPhone, the Leopard operating system, new video iPods and iTV, which will allow people to wirelessly access music and videos stored on their computer on their home entertainment systems, are all expected to appear sometime next year.”

Full article here.

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