UBS on Monday issued a short-term "Buy" rating on Apple's stock, and also raised the target price from $160 to $170. Analyst Maynard Um, however, maintained the stock's neutral rating for its 12-month forecast.
"Although our concerns regarding the potential impact of broader economic weakness remain," Um wrote, "a full (quarter) of MacBook Pro refreshes & iPhone 3GS expansion internationally should help Sept. (quarter). From a catalyst perspective, a potential data-centric (product) at Verizon Wireless, potential iPod refreshes, & new wireless operators (China, Europe non-exclusives, etc.) may help near term sentiment."
In the past, Um has expressed concern that increased component costs, particularly on LCD panels, could hurt the company's bottom line. He believes, however, that the announcement of a Verizon Wireless product would change the stock's outlook. Of all major analysts surveyed by AppleInsider after Apple's third quarter earnings report, UBS was the only one that was not bullish on AAPL stock.
With his latest report, Um believes that iPhone 3GS expansion, Mac sales and new products will drive the company's revenue higher in the short term. However, he believes it will be somewhat offset by component pricing — what he calls "the big wild card."
Um notes that Apple's fourth-quarter gross margins are usually lower, though that may be offset this year by higher margins on the iPhone.
In the June quarter, Apple reported record sales on the strength of the Mac and iPhone. The company posted revenue of $8.34 billion and a net quarterly profit of $1.23 billion, or $1.35 per diluted share.
Apple has clearly stated they intend to launch the iPhone in China soon. Last month, a new model of the iPhone for the China Unicom network was approved for use in the country, fueling speculation that an announcement could be nearing.