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Apple shares climbed to new highs on Monday, crossing the $ 1.7 trillion valuation level for the first time and approaching $ 400 a share, as two more analysts raised the company’s price targets ahead of quarterly earnings. June due July 30.
Bullish notes from Morgan Stanley and Wedbush focus on the bullish outlook for iPhone demand.
Apple’s shares have increased 36% for the year to date, increasing the company’s market capitalization by approximately $ 460 billion. The bullish sentiment stems from optimism about the fall launch of the first generation of 5G-capable iPhones this fall, as well as stronger-than-expected App Store revenue, growth in the company’s services business in general and the strength of portable devices, in Apple Watch and AirPods in particular.
On Monday, the focus was back on the iPhone.
Morgan Stanley’s Katy Huberty repeats her overweight rating on Apple stock, raising her target price to $ 419 from $ 340. In her research note Monday, Huberty focuses on Apple’s iPhone exchange program, which she sees it as a “sustainable competitive advantage”. Huberty notes that current iPhone owners have an exchange value of $ 147 billion, based on an average exchange value of $ 164 for an installed base of 900 million iPhones. According to her, that could finance 31% of iPhone purchases in the next three years.
Huberty says 48% of consumers have been using electronic device exchange programs, with an increase in adoption. In effect, that makes iPhones more affordable than they first appear, she says. Citing “improving iPhone accessibility combined with an aging installed base, a broader product line and attractive new technology features,” he raises his iPhone shipping forecasts for fiscal year 2021 and 2022 by 6% and 3% respectively. .
She claims that iPhones have a 2.6 times higher residual value than comparatively aging Android phones.
“With the iPhone replacement cycle already extended to 4.1 years, the increased adoption and value of the exchanges will become an accelerator of 5G updates, in our opinion,” he writes. “Importantly, we see the affordability of the iPhone materially improve as recent reports suggest that Apple’s iPhone 5G prices won’t change significantly from its 4G predecessors, while competitors are raising prices.” Combined with an installed base weighted average swap value of $ 164, net prices for the iPhone 5G could start closer to $ 535, much lower than the average 5G smartphone price of $ 735 in the past two quarters. ” .
Meanwhile, Wedbush analyst Daniel Ives repeated his Outperform rating on Apple stock, raising his price target to $ 450 from $ 425 and repeating his previous claim that Apple is likely the first company to reach a valuation of $ 2 billion. His “bullish case” target in the stock is now $ 525, implying a potential valuation of $ 2.27 trillion.
Ives writes that there is evidence of “a continued decline in demand in China during the month of June and early July despite some speed bumps,” and that “the stage is set for a massive iPhone 12 cycle headed toward falling into this key. ” region as well as globally. “He sees the potential for 60 million to 70 million iPhone updates in China alone over the next year.
Ives adds that controls with supply chain contacts “are giving us increasing confidence in the iPhone 12 growth story with strong underlying momentum in the 2021 calendar after iPhone 12, which remains the centerpiece from our ‘5G supercycle thesis’ at Apple. “
Wedbush analyst states that “the supply chain has returned to normalization ahead of expectations has been impressive and now finally puts [CEO Tim] Cook & Co. returned to the driver’s seat to launch this 5G cycle in its typical time frame of mid-late September with smartphones hitting the shelves / website in early October. “
Apple shares on Monday rose 4% to $ 399.
Write to Eric J. Savitz at [email protected]
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