Top analyst Amit Daryanani at RBC Capital is out with a bullish call on Apple Inc. (NASDAQ:AAPL) after his latest chats with the tech titan’s supply chain partners point to a slew of encouraging tailwinds ahead.
On the heels of these Asia “checks,” the analyst shares a positive perspective, reiterating an Outperform rating on AAPL stock with a $203 price target, which implies an 18% upside from current levels.
The suppliers have the analyst expecting a bit more of a reign on cost control from the AAPL team ahead, particularly following the ramps of the iPhone 8 and X- and their subsequent boost in features. Even for those worried of a prospective dip in average selling prices (ASPs) for iPhones, one of Wall Street’s best performing analysts is unfazed. After all, Daryanani wagers AAPL’s “tighter cost management should provide some offset.”
Here’s the lowdown on Daryanani’s key insights learned from his conversations throughout the Asia supply chain: “1) We continue to anticipate 3 different iPhones being launched – 6.1″ LCD Model and two OLED models (Xs and XsPlus – hopefully with better names). 2) Feedback from suppliers leads us to believe AAPL has been implementing tighter cost control since iPhone 8 ramp. 3) We think LCD SKU will likely be featured with a 6.1” full screen and 3D sensing and should account for ~50%+ of the 2H new iPhone production. 4) Based on our channel checks with suppliers, we think current expectation for new iPhones production is ~80M – 90M units for 2H18, below suppliers’ expectation of ~100-120M units for iPhone 8/X in early 2017. However, we think the y/y decline is partly due to supply chain partners managing inventory levels more diligently, & 5) Suppliers anticipate a regular production ramp schedule, which should start around May.”
In a nutshell, “We see [a] host of tailwinds – capital allocation, services growth, gross-margin upside and attractive valuation,” Daryanani contends.
Amit Daryanani has a very good TipRanks score with a 78% success rate and an impressive ranking of #17 out of 4,758 analysts. Daryanani yields 26.9% in his yearly returns. When recommending AAPL, Daryanani realizes 27.2% in average profits on the stock.
TipRanks indicates positive sentiment circling the big AAPL machine. Out of 29 analysts polled in the last 3 months, 16 are bullish on Apple stock while 13 playing it safe on the sidelines. With a return potential of 11%, the stock’s consensus target price stands at $190.55.