Bank of America Securities analyst Keith Bachman on Thursday released a brief research report obtained by The Mac Observer. In it, Mr. Bachman states that the "two key metrics" to focus on regarding Apple are iPod units and computer sales growth rates. With 5.4 million iPods in his sales forecast and a Mac sales growth rate of 25%-28%, he reiterated his "Buy" rating on the company's stock and added US$0.03 to his EPS (earnings per share) forecast for the current fiscal year and $0.04 to the number for next year, bringing them to $1.32 and $1.44, respectively. However, he did drop his twelve-month stock price target from $44 to $43 "based on lower comparable multiples."

Mr. Bachman also used the report to address recent issues surrounding Apple, acknowledging that he thinks "iPod shuffle demand has been weak, through iPod mini demand has been strong. We expect a new shuffle in the next few months, and believe an LCD-based refresh is needed. For [computer] systems, we think that demand for the iMac has been strong, and the Mac mini has been weak." However, he only expects sales of Mac OS X v10.4 "Tiger" to add a penny or two to EPS this quarter, not the nickel some analysts have forecasted.

Looking ahead, Mr. Bachman wrote that he would become more bullish on the stock if Apple's Mac sales grow 30% or more and if he sees his 2006 forecast for iPod sales to grow more than 20%. On the flip side, he'd become more bearish if Mac sales grow less than 20% or if iPod unit sales come in at less than 5 million for the current quarter. An increase in price competition would also cause him to react negatively.

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