Some Ways AAPL Can Beat Their Estimates....

Over the last 7 years, AAPL has grown earnings 88% compounded, dramatically ahead of the 3% annualized growth for the S&P 500, according to Bernstein Research analyst Toni Sacconaghi. But the Bernstein analyst also notes that current Street estimates have S&P profits outpacing Apple over the next two years - 26% to 14%.

On the other hand, as Sacconaghi points out in a research note, the Street has been extremely poor at forecasting Apple’s growth. Consensus estimates at the beginning of a fiscal year over the last 8 years have under-estimated Apple’s actual results by 24% - with the outlook two years out missing by an average 51%.

All that is prelude to Sacconaghi’s thinking on where some unexpected growth might come from for Apple in the two years ahead.

In his report, Sacconaghi lists five sources of growth that he contends together offer the potential for more than $5 a share in incremental profits:

* A non-data-plan iPhone - basically, an iPod Touch with a voice plan; he thinks such a device alone could boost annual EPS by $2.40 a share. (Sacconaghi has pushed this idea before, I should note.)

* More modest price declines on the iPhone. He’s currently modeling a $100 ASP decline due to competition and non-exclusivity in the U.S.; but if you only cut the price $50, you pick up an extra $1.90 a share.

* A successful iPad launch. Selling 7 million units in FY 2011 could boost profits by about 50 cents a share, he calculates.

* Revitalized AppleTV that serves as a media hub. Estimated boost: 35 cents a share.

* Increased App Store gaming revenues: estimated lift, 20-25 cents a share.

Sacconaghi also notes that there could be a hit to EPS from a delayed deal with Verizon Wireless on the distribution of the iPhone. The loss of Verizon for all of 2011 would reduce Sacconaghi’s current FY 2011 forecast by $1.02. A delay until June 2011 would result in a hit of 69 cents. There’s also risk of a modest hit to profits if they were to lose their current patent litigation with Nokia.

Meanwhile, Sacconaghi contends that given the recent pullback in the stock, and potential upside opportunities, “the stock is very attractively valued at current levels.” He repeats his Outperform rating and $250 price target....

long AAPL