It’s a positive week for the tech-verse. On one hand, Mizuho is lifting the price target on Apple Inc. (NASDAQ:AAPL) after analysis of the supply chain indicates Apple is set for a solid iPhone performance this year. On the other hand, though Tesla Inc (NASDAQ:TSLA) shares experienced weakness yesterday, Morgan Stanley continues to ride the bullish chain ahead of Elon Musk’s desire to enter the auto insurance spectrum. Let’s dive in:
Apple to Sell 225 Million iPhones
Mizuho analyst Abhey Lamba is increasingly bullish on Apple on the heels of his Japan research team’s realization that the tech giant should sell even more iPhones than initially calculated. In reaction, the analyst reiterates a Buy rating on shares of AAPL while boosting the price target from $135 to $150, which represents a just under 10% rise from where the stock is currently trading.
Just how many iPhone builds are predicted now? According to the analyst’s research team, 2017 should see an 11% year-over-year surge to approximately 225 million iPhones, outclassing previous expectations calling for 213 million.
Lamba elaborates, “Our Japan team, led by Yasuo Nakane, conducted due diligence across the mobile handset value chain which has led them to raise their full-year CY17 production estimates across handset portfolio. We point out that this is the second time the team has raised their full-year estimates in recent months […] Based on their latest checks, the team raises their build estimates for the 4.7 inch line-up (6/6S/7/8) and the 5.5 inch line-up (6+/6S+/7+/8+) by high single digits while taking their estimates for lower- end SKUs up by high teens from their December forecast. […] Our Japan also sees a path to about 240 million component procurement in case demand ends up being very strong.”
“Notably, the OLED display alone could contribute an incremental $25-30 to the bill of materials. Given Apple’s focus on maintaining gross margins, we believe the company is likely to raise prices modestly to preserve profitability on its flagship SKUs (as it did with the 7+),” the analyst concludes, believing Apple’s “mix” will be another asset weighing in the giant’s favor.
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Abhey Lamba is ranked #397 out of 4,501 analysts. Lamba has a 65% success rate and realizes 9.9% in his annual returns. When recommending AAPL, Lamba yields 28.1% in average profits on the stock.
TipRanks analytics show AAPL as a Strong Buy. Out of 28 analysts polled by TipRanks in the last 3 months, 28 are bullish on Apple stock and 7 remain sidelined. With a return potential of nearly 4%, the stock’s consensus target price stands at $142.31.
Tesla’s Venture into Auto Insurance
Tesla shares were dipping 4% following Goldman Sachs’ newly bearish rating on the electric car giant yesterday, but Morgan Stanley analyst Adam Jonas conversely highlights reasons to still bet on Elon Musk’s brainchild, particularly considering TSLA CEO Elon Musk’s aspirations to bring his giant into the realm of the auto insurance industry. As such, the analyst reiterates an Overweight rating on shares of TSLA with a price target of $305, which represents an almost 24% increase from where the shares last closed.
Musk says, “Not to the exclusion of insurance providers but if we find that insurance providers are not matching the insurance proportionate to the risk of the car, then if we need to, we will in source it. I think we will find that insurance providers do adjust the insurance cost proportionate to the risk of a Tesla.”
“We see a significant part of the ~$200b market value of the global motor insurance industry at risk, under the confluence of car technology, shared mobility, data analytics, and regulation. We estimate 15%-72% premium reduction by 2040, driven by downward pressures on the size of the car parc and reduced accident frequency. We also expect shared mobility and innovative models, like the Tesla insurance offering, could shift auto insurance from B2C personal insurance to B2B commercial insurance, and perhaps on an ‘insurance per mile’ basis. Insurers must adapt by leveraging technology throughout the value chain, partnering with OEMs and new mobility players to secure access to data and customers, or expanding into mobility related adjacencies,” Jonas concludes.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Adam Jonas is ranked #552 out of 4,504 analysts. Jonas has a 50% success rate and gains 10.0% in his yearly returns. When suggesting TSLA, Jonas earns 29.6% in average profits on the stock.
TipRanks analytics demonstrate TSLA as a Hold. Out of 17 analysts polled by TipRanks in the last 3 months, 6 rate a Buy on Tesla stock, 5 maintain a Hold, while 6 issue a Sell on the stock. The 12-month average price target stands at $242.80, marking a 1% downside from where the stock is currently trading.