Reuters: Hot Stocks: UPDATE 1-Apple rises after iPhone boosts profit

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UPDATE 1-Apple rises after iPhone boosts profit Apr 25th 2012, 08:48 April 25 | Wed Apr 25, 2012 4:48am EDT April 25 (Reuters) - Apple Inc shares surged more than 9 percent in premarket trading on Wednesday, after the company's quarterly profit overshot Wall Street estimates on better-than-expected iPhone sales, particularly in the greater China region. Apple, the world's most valuable technology company, on Tuesday said its second-quarter profit almost doubled after a jump in iPhone sales, soothing fears the device was past its best days for sharp growth. A Goldman Sachs analyst raised his price target on the stock to $850, suggesting the company's shares could rise more than 50 percent in the next 12 months. "Apple's margin upside has the most important long-term implications for the story," Goldman analyst Bill Shope said. Operating margins of 39.3 percent is a new record for the company, he said. Helped by lower-than-expected commodity costs, gross margins climbed to 47.4 percent from 41.4 percent a year earlier. Still, there are concerns that margins could suffer if Apple sold older models to ward off competition from cheaper Android phones made by the likes of Motorola Mobility and Samsung Electronics. iPHONE SALES MAY SLOW Analysts expect Apple's iPhone sales to drop or stay flat in the next two quarters ahead of the iPhone 5 launch this year. Apple sold 35.1 million iPhones - which accounted for about half its revenue - in the quarter. Based on the "remarkable" iPhone sales, Apple's share of the smartphone market likely increased to 24 percent in the first quarter from 23 percent in the fourth quarter of 2011, said analysts at Canaccord Genuity. "However, with increased channel inventory and seasonally slower iPhone sales given growing consumer expectations for the iPhone 5 later this year...Apple will lose smartphone market share during the summer," Canaccord's Michael Walkley said. Analysts at Canaccord Genuity, RBC Capital Markets, Barclays Capital, Goldman, Robert W. Baird, Citigroup, Wedbush Securities and BMO Capital Markets boosted their price target on the stock. They continue to rate the stock a "buy" or its equivalent rating. According to Thomson Reuters StarMine, 22 analysts rate the stock "strong buy," 23 rate it "buy," seven rate it a "hold' and only one rates it "strong sell." They have a mean price target of $680 on the stock. Shares of Apple were trading up $51.73 to $612.53 in trading before the bell on Wednesday. They closed at $560.28 on the Nasdaq. Link this Share this Digg this Email Reprints

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