Apple gains on iPod enthusiasm

Shares in Apple Computer gained 6 per cent on Monday after two key analysts raised their target prices for the company's stock amid continued strong demand for the group's popular iPod digital music player.

UBS raised its 12-month price target to $77 from $66, while Merrill Lynch predicted that Apple shares would probably rise to $78 in the next 12 months, up from an earlier estimate of $61.

Ben Reitzes, analyst at UBS, said in a research note that the iPod ?story has legs into the holidays and beyond?.

Apple has been the top performing stock in the S&P 500 this year, gaining more than 200 per cent since January. The computer maker's shares closed up $3.89 at $68.44 in New York yesterday.

Gene Munster, analyst at Piper Jaffray, last week helped propel Apple shares to a four-year high by forecasting the stock would surge to $100 within one year, in part because the iPod's brand would create a ?halo effect? and encourage new customers to buy other Apple products.

Technology analysts have long speculated about the iPod's halo effect, although sales of Apple computers have been lacklustre for most of 2004. However, Mr Reitzes said on Monday that retail checks this holiday season suggest there has been strong demand for the iPod as well as Apple's iMac computers.

?We still believe Apple is positioned to gain share in a decelerating PC market given its burgeoning retail network, new products and brand momentum,? he said.

The iPod accounts for about 82 per cent of the market for hard-disk music players and accounted for 23 per cent of Apple's $2.36bn in sales last quarter. That was up from 12 per cent a year earlier.

Apple has released new versions of its already iconic music player helping to increase demand for a device first launched in October 2001.