Top Analyst Calls for Apple Inc. (AAPL) iPhone X to Yield Strong Upgrade Sales By Next Year

Michael Walkley sets bullish expectations for high model X demand to vault iPhone ASPs.


Top analyst Michael Walkley at Canaccord is out singing high praise for Apple Inc. (NASDAQ:AAPL) in his latest research note calling for the strength of iPhone X demand to fire up climbing iPhone average selling prices (ASPs). Though the analyst’s domestic polling has pointed to substantial iPhone 8/Plus demand taking under account the “staggered” product launch, the analyst expects “very strong” demand when it comes to the iPhone X model.

Therefore, the analyst reiterates a Buy rating on AAPL stock with a $180 price target, which implies a 14% increase from where the shares last closed.

Walkley underscores, “While we anticipate demand for the iPhone X will be greater than Appleā€™s ability to meet supply during C2017, we are increasing our C2018 and C2019 estimates due to our increased ASP assumptions for greater mix of the iPhone X. We believe the compelling features of iPhone X including OLED display, improved battery life, wireless charging with the Qi standard, and overall improved functionality will lead to strong iPhone sales consistent with our 247M estimate for C2018.”

For the calendar year of 2018, the analyst calls for a worldwide iPhone replacement race surging from this year’s 26.8% up to 32.4% on back of buzz around new iPhone features as well as better supply compelling the titan’s expanding installed base to set a more robust upgrade cycle into motion. On back of these stellar calendar 2018 upgrade sale expectations, the analyst likewise calls for a “moderating” upgrade rate to 29.0% by calendar year 2019 to bring forth 237 million iPhone sales.

When looking at calendar 2018, the analyst has dialed back a hair on his iPhone unit forecasts from 250 million to 247 million units, but has boosted his APS expectations from $664 to $710, rooted in an enthusiastic prediction for a more impressive mix of the higher ASP iPhone X units. For calendar 2019, the analyst likewise has reigned in his iPhone unit projections from 233 million to 231 million units while lifting his APS forecast from $660 to $711. Subsequently, the analyst has adjusted his calendar 2017 EPS expectations on a downturn from $9.30 to $9.15; his calendar 2018 EPS estimate hiked from $11.35 to $11.91; and his calendar 2019 EPS forecast from $11.21 up to $11.74.

Glancing ahead, the analyst surmises with a confident panorama of what to expect for this tech titan: “We believe Apple continues to grow its leading market share of the premium-tier smartphone market and believe the iPhone installed base will exceed 635M exiting C2017. This impressive installed base should drive strong iPhone replacement sales and earnings, as well as cash flow generation to fund strong long-term capital returns. We anticipate a stronger upgrade cycle in C2018 with ramping supply of the high-ASP iPhone X.”

Michael Walkley has a very good TipRanks score with a 66% success rate and a high ranking of #51 out of 4,700 analysts. Walkley earns 19.0% in his yearly returns. When recommending AAPL, Walkley gains 26.2% in average profits on the stock.

Wall Street backs the top analyst’s bullish vote on the tech leader, with TipRanks analytics revealing AAPL as a Strong Buy. Based on 30 analysts polled by TipRanks in the last 3 months, 23 rate a Buy on Apple stock while 7 maintain a Hold. The 12-month average price target stands at $177.17, marking a nearly 13% upside from where the stock is currently trading.