NEW YORK (AP) — A Thomas Weisel Partners analyst cut his earnings estimates and price target for Apple, saying the weak economy is having a greater effect on computer and phone demand.
Thomas Weisel analyst Doug Reid kept his “Overweight” rating on the stock, saying it was still undervalued compared to Apple’s competition.
Reid now expects Apple to earn $1.05 per share in the current quarter and $5.10 per share in the fiscal year, down from previous per-share estimates of $1.10 and $6.55, respectively. He also cut his 12-month share price target from $130 to $120.
“Despite our reduction in estimates, we believe (Apple) shares are undervalued given the company’s strong cash generation capabilities, balance sheet and clear Mac market share gain momentum,” Reid wrote.
He dismissed the notion that third-party stores that sell applications for Apple’s iPhone, competing with the company’s own App Store, would have a negative effect. The stores had been the focus of a story in Friday’s Wall Street Journal. The company makes little money from the App Store, and the availability of competing stores increases the desirability of the iPhone, Reid wrote.
He was joined in that assessment by Charlie Wolf at Needham & Co., who kept a “Strong Buy” rating on Apple in a Monday research note. The independent stores will be limited to selling applications that Apple won’t sell, which means there should be no loss of revenue for the company, he wrote.
Shares of Cupertino, Calif.-based Apple fell 92 cents to $84.38 in premarket trading Monday.