UBS raises Apple estimates, says Intel Macs may come early

"After surveying several stores, we are more enthusiastic about prospects for upside in iPods given excitement around nanos and [video iPods]," analyst Ben Reitzes wrote in a research note released to clients on Monday. "Also, we believe iMac sales could have some upside into calendar 2006 based on our additional survey work that shows the new iMac G5 has been well received by customers."

Reitzes said momentum for iPods is picking up leading into the holidays, with checks indicating that both nanos and "especially new video iPods" are selling "very well." Meanwhile, the analyst said wait times for the new iMac have been increasing on Apple’s website and are now at 3-5 days for the 17-inch and 7-10 days for the 20-inch.

Looking ahead, Reitzes believes it is likely Apple will announce new products and content at its January 10, 2006 Macworld expo, with a possible introduction of the first Intel-based Macs. "We note that Intel will be introducing its dual-core “Yonah” processor in January (shipping now to vendors in pre-launch)," the analyst said.

After discussions with his firm's Semiconductor Research Team, Reitzes believes the Yonah processor may be a good fit for an Intel-based Mac Mini, which the firm says could make its debut as early as the Macworld Expo. "We also believe it is possible for the Yonah chipset to be included in an iBook, but we believe this option may be less likely for Apple right away since it could cause some performance disparities between the iBook and the PowerBook."

Reitzes added, "We continue to believe that both the PowerMac and PowerBook will be introduced at a later date (late 2006 or early 2007) – with the possible use of the Intel’s Merom processor for the PowerBook and Conroe processor for the PowerMac."

Also a possibility for the upcoming Macworld expo is an expansion of Apple's “digital hub” offerings, the analyst said. "We believe Apple could eventually discuss more innovations around media hubs (and related services) that act as storage units for music, movies, photos and/or other types of home entertainment."

Reitzes notes that Intel will be introducing its “Viiv” technology in early 2006, which promises to explore additional consumer entertainment opportunities within the PC. "We believe that Apple is positioned to play a significant role in the home digital entertainment arena and this offering from Intel could catch Apple’s eye eventually," he said.

Given Apple's recent strength, UBS is raising its December quarter earnings per share (EPS) estimates from 50 cents to 53 cents based on 43-percent revenue growth. The firm is also raising its iPod sales estimates for the quarter from 10.3 million units to 11.3 million.

For the 2006 and 2007 fiscal years, UBS its EPS estimates from $1.78 to $1.85 based on revenue growth of 30-percent and from $2.08 to $2.18 based on and 28-percent revenue growth, respectively.

The firm continues to rate Apple a "Buy," raising its price target on the company from $64 to $74.