UBS Just Raised Apple Q3 iPhone Estimates

In a report published Thursday, UBS analyst Steven Milunovich suggested Apple Inc. AAPL will report its June quarter iPhone demand at 51.1 million units, above the Street's consensus estimate of about 45 million. Milunovich's "UBS Evidence Lab iPhone Monitor" tracks consumer demand (sell-through) while Apple reports sell-in. Consequently, the analyst adjusts for supply issues and channel inventory changes that would create a difference between the reported figure and the Monitor's reflection of demand. Milunovich further raised his sell-in estimate from 43 million to 48 million units for the June quarter. The model considers historical shipment data from 20 countries and regions for which Google search values are established to forecast near-term demand. According to the data, there was a 23 percent year-over-year growth in global search volume, which indicates continued strength. Of note, China saw a more than 100 percent estimated search volume increase. Milunovich also noted that his model suggests iPhone average selling prices will experience a 4 percent year-over-year headwind due to the continued strength in the U.S. dollar. Of note, the dollar is 35 percent stronger against the real and 18 percent stronger against the peso year-over-year. Finally, Milunovich raised his full year fiscal 2015 earnings per share estimate to $9.17 from $9.04 due to a higher than previously expected sell-in estimate. Shares remain Buy rated with an unchanged $150 price target based on a fiscal 2015 P/E multiple of 16.5x, a 5 percent discount to the current market multiple, or 13.3x when excluding $26 in net cash per share.