Goldman Sachs analyst David Bailey this morning upped his estimates on Apple (AAPL) ahead of the company’s fiscal second-quarter earnings report, which is due after the close next Wednesday.

Bailey is looking for FY Q2 revenues of $8 billion, at the high end of the company’s guidance range of $7.6 billion to $8 billion, which would be down 21 percent sequentially, but up six percent year over year. He thinks gross margin will be about a point better than the company’s target of 32.5 percent, due to favorable component costs and product mix. As a result, Bailey upped his EPS estimate for the quarter to $1.07 from $1, which puts him a penny below the Street consensus of $1.08. Apple’s guidance had been for 90 cents to $1.

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Sun Microsystems (JAVA) shares are coming under pressure this morning after Goldman Sachs analyst David Bailey cut his rating on the stock to Sell from Hold. He cut his target price to $3, from $5.

“Sun’s heavy concentration of financial services, telecom and manufacturing customers and overweight dependence on a secularly declining segment (UNIX servers) put Sun at a disadvantage during this downturn versus more diversified competitors,” he writes in a research note. He says most of this is in the stock–down 79 percent in 2008–but says that a 76 percent uptick in the stock since the beginning of December and a 30 percent move in just the past three days “creates a compelling entry point,” by which he means a chance to short the stock.

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