The rumor mill has long suggested Apple (AAPL) is looking to gain a foothold in the rising EV space. Now its ambitions appear to be coming to fruition.
On Wednesday night, CNBC reported that Apple and Hyundai/Kia are inching closer to signing a deal to develop the Apple Car. The company’s planned autonomous electric vehicle is expected to enter production at the Kia assembly plant in West Point, Georgia, in 2024.
For Wedbush analyst Daniel Ives, the news is eye-catching yet not much of a shock.
“We continue to believe it’s a matter of when, not if, Apple enters the EV race and this will add another $30+ per share of TAM to the Apple growth story over the next few years given the golden age of EV transformation on the horizon,” the 5-star analyst noted.
Ives believes the EV market “could ultimately be a trillion-dollar opportunity,” and hails Apple’s “smart strategic move” to enter the space.
Apple’s automotive ambitions go back six years. Its plans for an EV – given the term Project Titan – were put on the backburner for a while but appear to be center stage again.
Whether Apple can really unveil its own standalone car by 2024, is questionable says Ives. The analyst says the tech giant has a 35%-40% probability of success to achieve the feat in such a short time span, given the “Herculean-like auto production capabilities, battery technology ramp, financial model implications, and regulatory hurdles involved in such a game changing initiative.”
Ives says the strategy to partner an established auto maker is the right way to go.
“We believe… that many on the Street would rather see Apple partner on the EV path, than start building its own vehicles/factories given the margin and financial model implications down the road, coupled with the strategic product risk around such a gargantuan endeavor,” the analyst added.
If the Hyundai-Apple rumors are true, then, this could be a “golden partnership for the next decade tapping into this EV opportunity.”
As a result, Ives reiterated an Outperform (i.e. Buy)rating on Apple shares, along with a $175 price target. This figure implies 27% upside from current levels. (To watch Ives’ track record, click here)
Most other Street analysts agree. AAPL’s Moderate Buy consensus rating is based on 20 Buys, 5 Holds and 2 Sells. At $149.92, the average price target suggests upside of 12% over the next 12 months. (See Apple stock analysis on TipRanks)
To find good ideas for tech stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.