UBS cuts Apple price target to $95 from $100

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Analysts for UBS Investment Research on Tuesday cut their price target on shares of Apple Computer to $95 from $100, but maintained a "Buy" rating on the stock.

"We believe that Apple's shares reflect second quarter results slightly below consensus with cautious guidance," analyst Ben Reitzes wrote in a research note to clients. "Weak iPod unit sales [of 9 million units or lower] may be expected."

However, the analyst still believes the company's guidance of $4.3 billion in sales and 38 cents in earnings-per-share (EPS) will turn out to be conservative given strength in its “other music" sales. "We believe second quarter EPS over 40 cents could be considered a positive given the recent plunge in shares," he wrote.

Citing his own checks, Reitzes estimates sales of 9.6 million iPods last quarter with a Mac unit shipment declining 9 percent year-over-year to 979,000 units. "We believe the 'Other Music' segment was solid with 9 percent revenue growth [since last quarter] helped by accessories and growth in iTunes," he said.

Given seasonality and the the Intel Mac transition, Reitzes, like other analysts, expects Apple to issue conservative guidance for its third (current) fiscal quarter of 2006. He believes this outlook may be conservative given a few new Macs slated for the quarter.

"Based on slightly lower estimates, our target adjusts to $95 from $100, still based on an EV/sales multiple of 3x our 2007 fiscal year estimate, higher than Apple’s 'pre-bubble' multiple and its peers due to faster growth and higher margins," the analyst wrote.

Also on Tuesday, Lehman cut its own price target on Apple to $73 from $80.


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