Deutsche Bank Raises Apple PT to $410; Citing Demand

Following channel checks over the holidays Deutsche Bank raised Apple AAPL est's to reflect better than anticipated iPad and Mac demand, no pause in iPhone demand ahead of the expected Verizon announcement, and favorable input costs. DB's iPhone estimate increases from 55M to 60M in 2011 (doesn't include Verizon expected in 1H11) and iPad from 22M to 28M. We expect Apple's strong product roadmap and channel expansion efforts to improve visibility on Apple's growth and its multiple. Deutsche Bank raises its PT to $410 and maintains its Buy on AAPL. Deutsche Bank's checks over the holidays at 50+ Apple retail and partner stores showed robust iPhone demand with long lines and heavy store traffic. Apple's supply chain performed well and despite the high demand there were limited stock outs ahead of Xmas. In addition, iPad remains largely unchallenged and was a high demand item over the holidays. DB estimates the iPad equates to ~$.10 in EPS. C4Q iPhone unit estimates from 15M to 16M due to robust holiday purchasing and little to no demand pause ahead of a widely expected Verizon launch in 1H11 (CY11 to 60M from 55M). These estimates exclude Verizon units ahead of a formal announcement. However, we estimate Verizon could reasonably add ~5-7M iPhone unit shipments in CY11 or ~$1.20-1.60 in EPS. DB raises CY4Q10 EPS estimate to $5.60 from $5.20; FY11 EPS to $20 (from $18); and FY12 EPS to $24 (from $21.35).