How Did the Analyst Make His Sales Assumptions?
RBC Capital Markets? Amit Daryanani wrote in a note to investors on Thursday that with about 33 million subscribers on T-Mobile, Apple
could sell about 4.8 million iPhones in the companies? first year together.?The analyst noted that Sprint (NYSE:S), the third-largest carrier in America, sold 6.3 million iPhones in the first year of availability to cover about 20 percent of the total number of its postpaid subscribers. But since only 70 percent of T-Mobile?s 33 million subscribers are postpaid, Apple would effectively be targeting 24 million users to convert. Assuming a similar 20 percent rate of conversion, it would then be in line to sell 4.8 million units.
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CHEAT SHEET Analysis: Earnings are Increasing Quarter-Over-Quarter
One of the core components of our CHEAT SHEET investing framework focuses on how a company?s earnings are changing over fiscal periods. With an average selling price of $600, and putting iPhone gross margins at around 50 percent, Daryanani expected the deal to add more than 60 cents to RBC?s projected $50 earning-per-share estimate for Apple?s fiscal year 2013.
In addition, sales of the iPad, particularly iPad mini, through T-Mobile would offer even more upside potential for Apple. If the carrier added 2 million in incremental iPad unit sales, it would lead to the addition of 25 cents to Apple?s projected earnings per share, Daryanani said.
RBC has an Outperform rating on Apple stock with a price target of $750.
Copyright Wall St Cheat Street All rights reserved.Source: http://www.ibtimes.com/t-mobile-good-news-apple-927679
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