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Apple’s (NASDAQ:AAPL) stock has taken a beating over the last few days — even dropping briefly on Wednesday to 20 percent below its high mark of $701.10 — but Jefferies analyst Peter Misek continues to have positive forecasts for the company. The analyst reiterated his Buy rating and a $900 price target on the stock in a note to investors on Thursday after Apple stock closed at $558 on Wednesday.
According to Misek, the main reason for his optimism is his belief that Apple’s gross margin issues will be resolved this quarter. In addition, the analyst says his checks indicate that the current iPhone 5 shortfall has been caused by assembly line issues at Hon Hai Precision Industries, and is thus easily solvable.
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The research firm sees three sources of gross margin upside. First, unit and component yield numbers indicate a big improvement during the quarter. Secondly, the firm has a 53 million iPhone shipment estimate for the three months, which is between 5 million and 7 million above Wall Street consensus. Finally, the analyst has raised his earnings per share prediction for Apple from $15.50 to $16.00 — way above the Wall Street average of $13.52.
As far as the Hon Hai problems go, Misek writes that the manufacturer idled about 50,000 employees due to component bottlenecks in the last quarter. But with those issues now alleviated, the manufacturer is trying to hire more people to meet the demand and Apple is paying Hon Hai higher amounts to do so.
The analyst is also of the belief that an increase in shipment guidance from Apple component supplier Qualcomm (NASDAQ:QCOM) suggests a consequent growth in iPhone shipments.
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