Modest Upside to Apple from Higher iPad Sales

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Apple (NASDAQ:AAPL) competes with Amazon (NASDAQ:AMZN), Sony Corporation (NYSE:SNE) and Barnes & Noble (NYSE:BKS) in the e-book reader segment.  We currently have a Trefis price estimate of $337 for Apple’s stock, about 28% above the current market price of $263.

Trefis members have created forecasts for two key drivers of Apple’s stock over the last week: (1) iPad Gross Profit Margin and (2) iPad Units Sales. The members’ forecasts suggest that iPad Gross Profit Margin and iPad Units Sales will trend above the Trefis forecast. These projections indicate a combined upside of around 1% for Apple’s stock.

We estimate iPad constitutes around 8% of the $337 Trefis price estimate for Apple’s stock.  Below are charts showing recent estimates created by Trefis members for (1) iPad Gross Profit Margin and (2) iPad Units Sales.

1. iPad Gross Profit Margin

The average of forecasts for iPad Gross Profit Margin created by Trefis members indicated a projected decrease from around 55% in 2010 to around 43% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of a decrease from 55% in 2010 to 40% by the end of the Trefis forecast period. The member estimates imply little upside to the Trefis price estimate for Apple’s stock.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of Apple’s stock to iPad Gross Profit Margin.

Our complete analysis for iPad Gross Profit Margin is here.

2. iPad Units Sales

The average of forecasts for iPad Units Sales created by Trefis members indicated a projected increase from around 11 million in 2010 to around 32 million by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 10 million in 2010 to around 29 million by the end of the Trefis forecast period. The member estimates imply an upside of 1% to the Trefis price estimate for Apple’s stock.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of Apple’s stock to iPad Units Sales.

Our complete analysis for Apple’s stock is here.

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