Will Apple Inc. (AAPL) Be the First Member of the ‘Trillion-Dollar Market Cap Club’?

GBH Insights' Daniel Ives predicts AAPL could sell more iPhones this time around than even its best during the iPhone 6 upgrade cycle.


Apple Inc. (NASDAQ:AAPL) is looking at a mega average selling price (ASP) boost on back of early soaring iPhone X demand.

GBH Insights analyst Daniel Ives sees a “trillion dollar club scenario” as the tech titan approaches the new year, believing demand for its latest, sleekest revolutionary iPhone model “looks to be very strong out of the gates for FY18 and into FY19.” In fact, the analyst calculates this offers the company over $12 of prospective earnings power approaching fiscal 2019.

As such, the analyst reiterates a Highly Attractive rating on AAPL stock with a $205 price target, which represents a nearly 20% upside from current levels. (To watch Ives’ track record, click here)

Ives argues, “With a growing services segment, a renaissance of China growth, $250+ billion of cash in the coffer (repatriation/tax code changes, buybacks, M&A could be further catalysts) and a major upgrade cycle on the horizon that Apple shares in a best case/bull case scenario could be in the $210-$230 range (17x-18x forward P/E) over the next year in our opinion and thus becoming the first member of the ‘trillion-dollar market cap club’. This upcoming holiday season could be a major catalyst that depending on supply chain constraints being alleviated, could translate into a better than expected FY1Q (Dec) quarter and be a clear catalyst for shares in the near-term. Based on our initial analysis from the first few weeks of sales since its official launch and the preorder demand trajectory, we believe the current iPhone X cycle is tracking between 10%-15% ahead of the iPhone 6/6+, which has been Appleā€™s most successful product launch to date and is a positive data point for FY18 growth.”

Looking ahead in his “crystal ball” as to what to expect for the iPhone X ramp, the analyst calls for AAPL to sell more iPhones in the 12 months on back of the launches for both the iPhone X as well as the iPhone 8/+ than when the iPhone 6 upgrade cycle hit its peak high. Ives angles for AAPL to hit 258 million iPhone units for fiscal 2018, which would outclass the company’s “record” 231 million-unit iPhone year experienced in fiscal 2015. Worldwide iPhone replacement rate should see a 38% boost in calendar 2018, Ives concludes, noting this is a bump up from the 27% seen in calendar 2017, with new iPhone features leading to a more robust upgrade cycle from a loyal, rising installed base.

Wall Street loves the big Apple empire, scoring one of the most bullish consensus ratings of the financial universe. TipRanks analytics demonstrate AAPL as a Strong Buy. Based on 31 analysts polled by TipRanks in the last 3 months, 25 rate a Buy on Apple stock while 6 maintain a Hold. The 12-month average price target stands at $187.30, marking a 9% upside from where the stock is currently trading.

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