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Janney Montgomery Scott analyst Bill Choi has raised his price target on Apple (NASDAQ:AAPL) stock from $720 to $745 this week after the company sent out invites to a media event, where most expect it to announce the iPad Mini and a 13-inch MacBook Pro with Retina display.
Choi wrote in his note to investors on Wednesday that Apple was likely to sell 25.5 million units of the iPad this quarter, with six million coming from the 8.75-inch version of the company’s ultra-successful tablet. The analyst added that he expected the new tablet, rumored to be launching on October 23, to be available in early November and eventually cannibalizing about 15 percent of the sales of the full-sized iPad. Choi said he saw the price point for the smaller tablet to fall between $299 and $399.
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The devices that the iPad Mini is expected to provide the most direct competition to — Google’s (NASDAQ:GOOG) Nexus 7 and Amazon’s (NASDAQ:AMZN) Kindle Fire HD — are both available starting at $199 for the most basic model, but Choi said the “premium product” from Apple would not suffer because of its higher price.
“We view the smaller iPad as mostly an incremental opportunity (for example, 8-16 year old and women), but see some modest cannibalization risk to the iPad and iPod Touch,” Choi wrote. “For the December quarter, we are now modeling a 5 million net increase in iPad units to 25.5 million (6 million from iPad Mini, offset by 1 million iPad cannibalization).”
The analyst also estimated a net increase of 19.8 million units in iPad sales in fiscal 2013, with the predicted total of 102 million units being split into 32 million for the Mini and 70 million for the normal iPad.
However, Choi brought down his iPhone sales estimate for the September quarter minimally, citing supply constraints. “We are lowering our September quarter iPhone estimate to 26 million units from 27 million to reflect supply constraints that limited iPhone 5 shipments. However, we see Apple making progress on these supply constraints over the next few weeks and leave our high-end 50.7 million iPhone unit estimate unchanged,” he added.
Choi maintained his Buy rating on the stock.
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