Some encouraging news for Apple Inc. investors: RBC Dominion Securities Inc. has released details of a proprietary survey that shows “unprecedented” demand for the iPhone 5 and strong back-to-school buying intentions for the iPad.
The survey, taken Aug. 2 to 10, found that 31 per cent of 2,200 respondents were very or somewhat likely to buy the iPhone 5. That significantly exceeds the 25 per cent of respondents who had said they intended to buy the iPhone 4 ahead of its launch more than a year ago. Meanwhile, 66 per cent of existing iPhone users said they were very or somewhat likely to buy the iPhone 5, suggesting many current customers are planning to upgrade.
The potential market for the iPhone is expected to expand significantly when the fifth version of the device comes to Sprint at the end of this year. Some 54 per cent of surveyed Sprint subscribers said they may buy the iPhone.
“With surveys showing the still huge iPhone opportunity, we remain constructive on shares, and view valuation as compelling,” RBC analyst Mike Abramsky said in a research note.
He raised his fiscal year 2012 iPhone sales estimates by five million units to 110 million. He also sees better-than-expected sales ahead for the iPad, as the survey found 26 per cent of respondents were very or somewhat likely to buy the second version of the device.
This translated in a bump up in his financial forecasts for the company, now expecting earnings per share in fiscal 2011 of $28.30 U.S. (from $27.63) and $34.50 for fiscal 2012 (from $33.50)
Upside: Mr. Abramsky maintained an “outperform-above average risk” rating on Apple, with a $500 price target.
Despite concerns that economic uncertainty could result in lower consumer spending, checks conducted by Canaccord Genuity indicate solid global smart phone trends and healthy inventory levels. Analyst T. Michael Walkley said this bodes well for Qualcomm Inc. , a leading wireless chipset supplier. “We maintain our belief Qualcomm is well positioned to post strong earnings growth during the fourth quarter of fiscal 2011 and fiscal 2012 due to stable royalty rates, growing connected tablet and smart phone sales, increasing market share for Qualcomm’s integrated chipsets, and accelerating 3G device sales in emerging markets,” he said.
Upside: Mr. Walkley has a “buy” rating on Qualcomm with a $72 (U.S.) price target.
First Majestic Silver Corp. released a pre-feasibility study on the La Parilla silver mine in Mexico, which included updated reserves and capital requirements for the ongoing expansion. “Despite increased reserves and throughput, our valuation for the mine falls slightly due to lower grades and increased costs,” said CIBC World Markets Inc. analyst Brian Quast.
Downside: Mr. Quast maintained his “sector performer” rating but cut his price target by $1 to $29.
AGF Management Ltd.’s saw assets under management decline by 6.5 per cent in its fiscal third quarter ended Aug. 31, noted Canaccord Genuity analyst Scott Chan, who anticipated a drop of only 2.0 per cent. He now expects the company to post earnings per share of 33 cents when it reports financial results for the quarter on Sept. 28, which is below the consensus estimate of 36 cents.
Downside: Mr. Chan cut his price target by $1 to $17 and maintained a “hold” rating.
Compared with their European and U.S. counterparts, Canadian banks as a group “are in phenomenal shape,” with strong capital positions and still-growing operating profit, commented Desjardins Securities Inc. analyst Michael Goldberg. “In the near term, we believe that the market will reward Canadian banks for their lower capital markets leverage and greater risk diversification,” he said.
Upside: Mr. Goldberg is most bullish on Bank of Nova Scotia and Toronto-Dominion Bank . Both are rated as a “top pick,” awarded to stocks that are expected to significantly outperform their peer group over a 12-month period.