FBR Capital Weighs In on Apple Inc. (AAPL) Ahead of iPhone 6s Launch

Apple Inc. (NASDAQ:AAPL) sent out invitations Thursday to a media event where it is expected to unveil the anticipated “iPhone 6s” and a range of other hardware. Apple will hold the event on September 9 at the Bill Graham Civic Auditorium in San Francisco. In reaction, FBR Capital analyst Daniel Ives weighed in today with a research report ahead of the event.

The analyst is expecting a number of announcements and product launches with a larger 12.9-inch iPad Pro, next generation Apple TV, and the new iPhone 6s/6s+ front and center, as investors will be laser focused on the iterative improvements in 6s that could spur upgrades. Ives noted, “While there are a slew of possibilities for what to expect at the September 9 Launch Event, in our view, Apple will deliver meaningful updates under the hood. Force Touch remains the key new feature; a pressure-sensitive input beneath the users touch screen adding a new dimension for shortcuts and gestures. Force Touch debuted on Apple Watch and has since been integrated into Apple’s MacBook product line, leaving Apple well positioned to dazzle customers with the dynamic new feature unseen on competing Smartphone’s. The new iPhone cameras are likely to be a major driver of 2H upgrades as well, possibly featuring a 12-megapixel camera, a major upgrade from the 8-megapixels featured on its iPhone 6/6+ predecessor.”

“We view this as a critical event for Apple to help turn the negative investor tide and help lay out its growth vision for the next year on the heels of the iPhone 6 super-cycle product tailwinds. While we acknowledge this “white knuckle” period for Apple we are positive on shares as: (1) less than 30% of its customers upgrading to iPhone 6 to date, (2) a major product cycle ahead with the launch of 6s, (3) the China market representing a $100 billion market opportunity for over the next three years (taking a 30% haircut to our estimate) and (4) the Company trading at 9x ex-cash,” the analyst concluded.

Ives reiterated an Outperform rating on Apple stock, with a price target of $175, which represents a potential upside of 57% from where the stock is currently trading.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Daniel Ives has a total average return of 3.8% and a 45.8% success rate. Ives has a -10.8% average return when recommending AAPL, and is ranked #968 out of 3734 analysts.

Out of the 53 analysts polled by TipRanks, 35 rate Apple stock a Buy, 15 rate the stock a Hold and 3 recommend Sell. With a return potential of 28.0%, the stock’s consensus target price stands at $143.05.

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