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JP Morgan sees strong growth at Apple; ups target

JP Morgan Securities raised its price target on Apple Inc by 4.5%, citing better-than-expected growth momentum for Mac, iPhone and iPod.

The upside potential is expected to remain in Mac and iPhone moving through 2010, analyst Mark Moskowitz, who reiterated his “overweight” rating on the stock, said.

Investor concern about the company's business slowing during and after the Black Friday weekend should fade, the analyst said.

The company's shares, which have shed 4% in the past one month, were trading up at $196.10 before the bell. They closed at $194.67 Friday on Nasdaq.

The analyst raised his estimates for the December quarter and his price target to $230 from $220 on the stock.

“Our conversations with industry contacts suggest that the Mac shipment levels have improved over the last two weeks,” Moskowitz said. He raised his unit estimate to 3.29 million from his prior view of 3.17 million.

The overall strength exhibited this quarter is encouraging, given Apple is coming off of a September quarter that benefited from pent up demand related to the Mac refresh, Moskowitz said.

The analyst raised his unit estimates for iPhone by about 8% to 8.18 million and for iPod to 21.97 million from 21.62 million.

Anxiety over US iPhone exclusivity is overdone but likely to continue, the analyst said, adding that in recent weeks, the stock has been whipped around as investors debate over whether Verizon Wireless or TMobile would be the next U.S. carrier.

Apple has an exclusive and very lucrative deal with AT&T Inc - believed to run into 2010 - to carry the iPhone on its GSM network.

With the iPhone still penetrating many markets for the first time, though, including China and Korea, working with Verizon is not a necessity to driving market share wins in the next 12 months, Moskowitz said.

“A move to Verizon could be a longer-term catalyst to underpin growth two to three years out,” he said. (Reuters)