Analysts give muted reaction to Apple's mini iPad

Apple Inc's "iPad mini" will attract new customers but the higher-than-expected price will come as a relief to low-cost tablets such as Amazon.com Inc's Kindle, analysts said, in a muted reaction to the new tablet.

Few analysts revised their price targets for Apple in the wake of the announcement, with one raising their target and one cutting it.

Apple shares edged up 0.7 percent to $617.75 in premarket trading.

The 7.9-inch mini version of the iPad has most of the functions and features of the full-size iPad but in a smaller package and is cheaper by $170.

"We believe the iPad mini with its $329 starting price for the 16GB WiFi only model will help Apple reach a new customer base, particularly for holiday gifts to teenagers that may not have been able to afford the higher-end iPad," Canaccord Genuity analyst Michael Walkley wrote in a research note.

He raised his price target slightly on the stock to $800 from $797.

The $329 starting price for a Wi-Fi only "iPad mini" was higher than many expected and some analysts said the gadget might lure buyers away from Apple's $499 flagship 10-inch iPad, yet struggle to compete with the cheaper Amazon Kindle Fire and Google Inc's Nexus 7, both of which are sold at or near cost.

"We were hoping the price would be at least a little lower given its competition is situated as low as $99, with many starting in the $199-$249 range," Barclays Capital analyst Ben Reitzes said.

He cut his price target on the stock to $800 from $810, bringing him more into line with other analysts, although the price targets are still well above the current market price for the shares.

While Canaccord estimates that Apple will sell 9.25 million units in the December quarter. Barclays forecast sales of more than five million units.

"While we believe these strong sales will come largely at the expense of Apple's competition, we concede iPad Mini will likely cannibalize iPad and iPod Touch sales," analyst Walkley said.