Apple's Top Stock Analyst Just Took His Target Even Higher

Apple Inc. (NASDAQ: AAPL) has enjoyed an amazing 2020, and its lead as the world’s largest company by market cap just keeps on dazzling its investors. Until last Friday, its shares had risen for seven straight days, from about $372 to above $357. Friday’s $10 drop was just profit-taking, and Apple’s shares surged after one of its top analysts took one of Wall Street’s highest price targets even higher.

Monday’s top analyst calls included a note from Wedbush Securities that reiterated an official Outperform rating. The firm’s Daniel Ives also raised the price target to $515 from $475, above what had been a street-high target of $485. Ives called out Apple as his favorite name to play the 5G theme. Ives also has a strong belief that another re-rating of Apple’s stock is on the horizon, meaning that investors will be willing to pay a higher share price for the same metrics they are already counting on.

Wedbush’s new Asia supply chain checks over the past week signaled “a discernible uptick in forecasts for iPhone 12,” and this is said to show solid demand trends heading into this super-cycle October iPhone launch. The firm was previously expecting four models with a mix of 4G and 5G for the new iPhone 12, but now the firm is only expecting 5G models for the fall launch along with a next-generation 4G model as its fifth model with lower pricing points in early 2021.

Monday’s upgrade also pointed out that there will be a U.S. and an international version introduced. According to Ives, the U.S. version will have mmWave technology after some technology wrinkles appear to have been ironed out. He sees this as a clear positive heading into this pivotal launch.

As for a re-rating, Ives believes that a $2 trillion market capitalization is also on the near-term horizon. Even with a recession and a COVID-19 pandemic dragging on consumers, Apple is said to be in a once-in-a-decade opportunity over the next 12 to 18 months. Roughly 350 million of the 950 million iPhones around the planet are in traditional upgrade windows.

While there have been international tensions, China is shown to remain as a key ingredient in Apple’s recipe for success. Ives sees roughly 20% of iPhone upgrades coming from the region over the next year, and China has shown considerable strength in the past few months.

Ives further noted that re-rating comes with earnings estimates of $13.30 per share in 2020 and $15.40 per share in 2021. Those are also based on $277.66 billion in 2020 revenues and $301.11 billion in 2021 revenues. The report said:

We still believe many on the Street are underestimating the massive pent-up demand around this super cycle for Apple, which remains the opportunity for the bulls as the $2 trillion dollar market cap threshold is now within grasp with a lot more fuel left in Cupertino’s tank heading into 2021.

Another analyst call also drove interest in Apple. Apple was named as the Bull of the Day at Zacks. The firm noted that the firm delivered impressive results and a stock split is in the cards for the iPhone giant. The report noted that many newbie investors are excited about the coming four-four-one stock split, but the real story is how Apple’s ecosystem continued to diversify beyond the iPhone and that its handily beat sales estimates in almost every category.

Apple shares traded up 1.3% at $450.54 on Monday, in a 52-week range of $199.15 to $457.65. Its consensus target from Refinitiv was $423.07, and its market cap was $1.925 trillion on last look.