Why This Analyst Just Got Very Bullish on the iPhone 12
Apple Inc. (NASDAQ: AAPL) has been one of the top-performing blue-chip stocks throughout the COVID-19 pandemic. In fact, Apple stock ranks second in the Dow Jones industrial average in terms of its year-to-date performance. Even with this incredible performance, one analyst sees Apple rising even higher.
The iPhone giant has largely weathered the coronavirus pandemic on the back of its Services business, but boutique brokerage firm Wedbush Securities sees Apple rising even higher on its bread and butter business — iPhone sales.
Wedbush reiterated an Outperform rating with a $375 price target, implying upside of 9% from the most recent closing price of $342.99.
While the firm was hearing some delays over the past few months that would have pushed Apple’s product cycle (iPhone 12) into October or November, Wedbush now expects this timeline to be moving up. The firm believes that the iPhone 12 will be revealed in late September, with the smartphones ready to hit shelves globally in early October.
Apple’s supply chain appears to be getting back to normalization ahead of expectations, and Wedbush believes that this will put the company back in the driver’s seat to launch this 5G cycle in its typical September timeframe. Wedbush detailed in its report:
Although there has been some noise about the 5G component of this iPhone product cycle, we are hearing from suppliers this launch globally and within the US is right on target and sets the stage for Apple to go after this transformational multi-year 5G market opportunity.
Wedbush expects that four models of the iPhone 12 will be launched, with a mix of 4G/5G with price points that potentially could be lower than $1,000 on some versions despite the additional 5G component. At the same time, the firm is hearing that no wire EarPods will come with the iPhone 12, which ultimately would create more cross-sell opportunities for AirPods over the coming year. The expectation is that Apple is on a trajectory to now sell 85 million AirPod units, up from 65 million in 2019.
From a 5G perspective, there will be a US and non-US version introduced. The US version will have mmWave technology and after some technology wrinkles appear to have been ironed out by Apple and its suppliers over the last month, which is a clear positive heading into this pivotal launch. From a demand perspective, we estimate that 350 million of Apple’s 950 million iPhones worldwide are in this upgrade window which remains the linchpin to our longer-term bullish thesis and 5G super cycle for Cupertino over the next 12 to 18 months.
Apple stock traded up about 2% to $350.33 on Tuesday, in a 52-week range of $192.85 to $354.77. The consensus price target is $323.98.