UBS bullish on Apple's Mac distribution expansion

Analyst Ben Reitzes, who maintains a Buy rating and $124 price target on shares of the Cupertino-based Mac maker, informed clients in a research note of Best Buy's decision to expand its Mac pilot from 58 stores currently to approximately 200 by this fall.

"During Apple's earnings call in [January], management stated that it was evaluating the results of its relationship with Best Buy and deciding how to proceed with the relationship," he wrote. "We believe the Best Buy expansion is a positive for Mac sales long term."

Reitzes said recent checks indicate that Mac sales "held up well" during Apple's fiscal second quarter of 2007, ended March, and could be poised for acceleration alongside the successive launches of Mac OS X 10.5 Leopard and Adobe's Creative Suite 3 bundles later this spring.

The analyst estimates Mac unit shipments grew 34 percent year-over-year during the quarter to 1.5 million units. His models for the full fiscal years of 2007 and 2008 call for Mac units to grow 27 percent and 25 percent to 6.7 million units and 8.4 million units, respectively.

"We are also optimistic about additional new Mac products and Apple's potential to expand relationships with Best Buy and Circuit City even further," he added.