Sterne Agee Maintains Buy on Apple Ahead of Earnings Report

Sterne Agee has published a research report on Apple

ahead of the company's earnings report, expected today after market close. In the report, Sterne Agee writes, "We had raised estimates materially in early December based on our checks into the AAPL global supply chain indicating upside in iPhones and Macs. Since then, consensus estimates have caught up. Based on our updated checks, we are raising our estimates again and see room for upside, particularly EPS, based on a favorable product mix toward iPhone. We are now modeling 29.5 million iPhones (from 28 million) and leaving our Mac and iPad assumptions intact at 5.2 million and 13.5 million units, respectively. We are also assuming a higher gross margin of 41.2% (from 40.9%) due to a favorable product mix toward iPhone, as well as fairly benign component pricing." Sterne Agee maintains its Buy rating and $540 price target on Apple, which closed yesterday at $427.41.