With the 2018 Apple Inc. (NASDAQ:AAPL) Worldwide Developers Conference (WWDC) just around the corner in San Jose, California, one bull is eager to see the slew of product stellar product reveals on the table from CEO Tim Cook and co. at the tech machine.
GBH Insights analyst Daniel Ives gives priority to software updates from Apple over hardware releases at the WWDC, anticipating an iOS 12 launch keyed into bug fixes and “refinements” along with fresh features to revamped capabilities. Additionally, Ives keeps his focus peeled to the new software releases for the Apple Watch 3. Moreover, Ives shines light on the “trifecta”: a mega iPhone product cycle for the back half of the year, a newly boosted buyback program, and a multiple re-rating. In fact, with this triple threat, Ives wagers AAPL stock could be driven close to the $200 range and trillion-dollar point in the next three to six months.
Ahead of the conference with a robust product cycle “on the horizon,” the analyst reiterates a Highly Attractive rating on AAPL stock with a $200 price target, which implies a close to 7% upside from current levels. (To watch Ives’ track record, click here)
“While there is an ‘outside’ chance we can see a glimpse of the next iPhone SE 2 model and its 5.5 inch screen with some possible hints around the next redesigned Mac Pro, the major focus of WWDC will be around software updates rather than hardware releases with all developer eyes on the unveil of the much anticipated iOS 12. Taking a step back, we believe the Street is now starting to fully appreciate the massive iPhone upgrade opportunity on the horizon for the next 12 to 18 months with three new smart phones slated for release, likely in the September timeframe although we could see the SE 2 launched over the coming months,” highlights Ives.
When the analyst crunches the numbers, he forecasts the tech titan is looking at around 350 million iPhones that have the chance of an upgrade throughout the next year and a half. It is simply a matter of which model and price tag lure customers to spring for the upgrade, especially considering that as of the close of December, iPhone X demand hit a supply/balance level, weakening demand.
“This also speaks to Apple’s decision to go down the OLED route on all designs next year (2019) according to reports out of Asia, which is a smart strategic move in our opinion given this display feature remains a key focus for smart phone consumers across various price levels with demand drivers key in this decision out of Cupertino,” continues the analyst.
Overall, Ives keeps his eyes on three new iPhone releases to be “staggered” in the next three to six months, that hopefully will assist in luring the iPhone customers who sat on the “fence” during the last smartphone cycle, “with Chinese consumers front and center.” Glancing ahead, the analyst estimates anywhere from 60 to 70 million Chinese iPhones glinting in the “upgrade window” over the next year to year and a half with the iPhone X as well as forthcoming launches as key prospective product drivers in the key Chinese market. Even amid short-term demand challenges for the iPhone X, Ives remains bullish as ever on the company’s monster product cycle in progress.
TipRanks indicates caution mixed with optimism on Wall Street when it comes to AAPL stock’s opportunity, with the bulls and the sidelined analysts largely split. Out of 28 analysts polled in the last 3 months, 15 are bullish on the big AAPL machine with 13 remaining sidelined. With a return potential of nearly 4%, the stock’s consensus target price stands at $194.83.