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Analyst: Apple to hit upper-end of guidance

Apple Computer, which reports earnings from is third fiscal quarter this Wednesdays, is expected post results near the upper-end of its guidance, according to American Technology Research.

"We anticipate Apple to report results at the upper-end, if not exceed, its guidance of $4.2 - $4.4 billion in revenue and 39 cents - 42 scents in earnings-per-share (EPS)," Shaw Wu, an analyst at the firm, told clients on Monday.

For the quarter, Wu has been modeling sales of 8.3 million iPods and 1.2 million Macs, which he believes will fuel revenues of $4.4 billion and earnings of 44 cents per shares.

However, Wu is taking exception to Wall Street's consensus estimates that Apple will reach the $5 billion revenue milestone during its (current) fourth fiscal quarter, which ends in September.

"We continue to believe that consensus revenue of $5 billion, looking for 13 percent quarter-over-quarter growth, is unreasonably aggressive," he said.

The analyst said this outlook for the current quarter should longer come as a surprise, given that several other analysts now share his view that the next-generation iPod nano will likely see a multi-month delay.

Instead, Wu is expecting Apple to offer guidance of $4.6 billion for its fourth fiscal quarter, which would imply sequential growth of about 5 percent.

"With Apple shares off about 22 percent since its last earnings report, we believe expectations on Apple are fairly muted," he said. "In addition, many of our sell-side peers have reigned in their unrealistic expectations."

"We have noticed that Apple shares tend to be overbought or oversold," the analyst added. "With the stock now trading at 20 times our calendar year 2007 EPS, we believe there is an over-discounting of Apple's fundamentals and growth prospects that remain among the strongest in large-cap technology.

American Technology Research continues to rate shares of Apple a "Buy" with a price target of $75.