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Friday, October 08, 2010, 05:35 am PT (08:35 am ET)

Apple 'not too big to blow it out' in upcoming quarterly results

With Apple's Oct. 18 quarterly earnings report approaching, one Wall Street analyst expects the iPhone maker to issue a "blowout" report, noting the company is "not too big" to surprise investors with sales of 12 million or more iPhones.

Yair Reiner with Oppenheimer said in a note to investors on Friday that although AAPL stock is up 37 percent in 2010, it has still lagged behind the company's fundamentals, in which consensus earnings per share estimates are up 75 percent since January.

"The prime factor behind the underperformance of the stock relative to the fundamentals seem to be investor concern about Apple's size," he wrote. But a blowout September quarter would spur an "overdue" catch-up with investors, he said.

As such, Oppenheimer has raised its 12-to-18-month price target for AAPL stock to $345. Reiner said he expects Apple to report $19.9 billion in revenue and $4.41 earnings per share, increases from his previous predictions of $18.5 billion in revenue and $4.01 earnings per share.

Reiner also increased estimates for iPhone sales to 12 million in the quarter, up from the previous projection of 10.5 million. He also sees Apple selling 4.5 million iPads, an increase from his earlier forecast of 3.9 million. He also said his estimates could still prove to be slightly conservative.

"Bottom line, as big as Apple is today, it seems destined to get much bigger," Reiner wrote. "We're still taking our first baby steps into an iOS world in which seamless connectivity to cloud services through purpose-built apps lays waste to conventional modes of broadcasting, marketing, distributing, and consuming every manner of video, audio and printed material."

The analyst said his one concern with Apple is expectations of a Verizon iPhone in early 2011. Reiner said he doesn't see the motivation for either Verizon or Apple to make a deal so soon.

Reiner previously expressed concern that the iPhone 4 "antennagate" controversy could negatively affect Apple's handset sales. But as the controversy has faded away, it's no longer considered a factor.