RBC: Apple's Mac Thriving In Tough Market, AAPL To $190

Forget the recession -- Apple (AAPL) will beat the Street when it reports March quarter earnings on Wednesday, RBC analyst Mike Abramsky says in a note today.

Abramsky expects Apple to report $7.2 billion of Q2 sales, up 36% year-over-year and above the Street's $6.9 billion consensus. He says strong gross margins will lead Apple to post $1.11 in EPS, beating the Street's $1.06 consensus. He also jacked his AAPL price target to $190 from $175.

Leading Apple's quarter: Strong Mac sales, despite a weak U.S. PC market. Abramsky expects Apple to report 2.2 million Mac shipments in Q2, up 46% year-over-year. No massive sales numbers for the new MacBook Air -- he's modeling 150,000 shipped, or 11% of the 1.3 million laptops he projects Apple sold -- but he says the Air has mostly been "additive" versus cutting into Apple's other laptop sales.

Meanwhile, as expected, Abramsky projects weak March quarter iPod sales -- 10.0 million units, down 5% year-over-year. And he thinks Apple will report selling 1.8 million iPhones during the quarter; he thinks  30% of those will be "unlocked" and sold overseas.

One potential source of weakness: Abramsky expects the company to give below-consensus guidance for the June quarter. He expects Apple will guide to $6.9-7.1 billion of revenue and $0.98-$1.01 EPS, which is below the Street's $7.14 billion revenue/$1.10 EPS consensus. Why? Abramsky doesn't offer an explanation. Apple always forecasts conservatively, but its low guidance sent shares down 11% after hours after its otherwise strong Q1 report.

See Also:
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