Apple (NASDAQ:AAPL) recently announced its fiscal year Q2 earnings in which it provided better than expected iPhone unit sales results.  The iPhone is the most valuable business for Apple and accounts for more than half of the company’s stock value by our estimates. The company managed to avoid disruptions from supply related issues, a concern we discussed recently (see “Will Supply Constraints Temper the iPhone’s Impact for Apple?“). Apple continues to show faster growth in the smartphone market than competitors Research in Motion (NASDAQ:RIMM), Nokia (NYSE:NOK) and Motorola Mobility (NYSE:MMI).
We have updated the Trefis price estimate for Apple stock from $420 to $430, in part due to better than expected iPhone sales. Our price estimate stands roughly 20% above market price.
Apple Overcomes Supply Constraints
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In the last quarter, Apple expressed concern that the supply related issues might prevent it from selling more iPhones.  Additionally, the recent Japanese earthquake caused headaches for Apple in terms of supply chain constraints as most of the suppliers for Apple were Japanese companies.  However, Apple seems to have avoided stumbling on these issues with its better than expected iPhone sales.
…we did not have any supply or cost impact in our fiscal Q2 as a result of the tragedy, and we currently do not anticipate any material supply or cost impact in our fiscal Q3. To provide a bit more color on this, we sourced hundreds, literally hundreds of items from Japan, and they range from components such as LCDs, optical drives, NAND Flash and DRAM to base materials such as resins, coatings and foil that are part of the production process at several layers back in the supply chain. The earthquake and subsequent tsunami and the associated nuclear crisis caused disruption for many of these suppliers, and many unaffected suppliers have been impacted by power interruptions. But since the disaster, Apple employees have literally been working around the clock with our supplier partners in Japan, and have been able to implement a number of contingency plans. Our preference from the beginning of this tragedy has been to remain with our long-term partners in Japan… 
We have raised our estimates for Apple’s market share from 4.2% to 5.1% for 2011 as a result of the better iPhone numbers. However, if this momentum continues in the long-term as well and iPhone’s market share increases at a faster rate to reach 20% by the end of Trefis forecast period instead of 13% that we forecast, there could be an additional upside of 30% to our price estimate.Notes: