Apple Inc. (NASDAQ:AAPL) issued first fiscal quarter earnings for 2018 last week that soared past expectations- including second fiscal quarter guidance that underwhelmed Street-wide expectations. Now that the storm has cleared, with many fearing just how bad that guide would be considering rocky rumors of iPhone unit cuts, one bull believes the time for panic has now passed.
GBH Insights analyst Daniel Ives wagers that investors can now pay rapt attention to the following key bullish points: 1) iPhone product buzz; 2) growth prospects in China, Apple’s “main swing factor” (where notably iPhone shipments jumped 12% for the quarter and average selling prices saw a big upturn circling $800); and 3) a “massive buyback on tap” as the company considers spending most of its cash on share buybacks.
Therefore, the analyst reiterates a Highly Attractive rating on AAPL stock with a price target of $205, which implies a close to 19% upside from current levels. (To watch Ives’ track record, click here)
“With Apple shares up roughly 15% from its lows over the last week on the heels of a broader market snapback, we believe the Street is finally seeing the forest through the trees as the March guidance hangover appears to have dissipated. Now all eyes are on the trifecta of a major iPhone product cycle for 2018, a ~$300 billion buyback potentially on the horizon to be announced in April, and a multiple re-rating that we believe will move shares back into the $180-$200 range over the coming quarters. Importantly we estimate Apple has roughly 350 million iPhones that are in the window of opportunity to upgrade over the next 12 to 18 months, now it’s about which model and price point ‘strike a chord’ for these customers to ultimately upgrade as the iPhone X demand has softened since reaching a supply/balance level in late December,” asserts Ives.
Looking ahead, the analyst looks for three new iPhones to be released from the Apple machine, and for these releases to be “staggered” in the course of the next year to year and a half. Ives’ theory: the tech titan seeks to stir the demand pot and attract upgrades from consumers who opted to skip the iPhone 8/8+/X cycle for now. Especially if Apple unleashes “price points and features that catalyze fence sitting iPhone customers onto their next smartphone” throughout the rest of the year, this bull believes solid drivers still lie ahead for the empire.
TipRanks highlights a largely optimistic Wall Street opinion swirling around the big Apple, with only 12 out of 30 analysts in the last 3 months on the sidelines- and 18 bullish on the stock. Notably, the 12-month average price target stands at $193.19, suggesting almost 12% in upside potential from where the stock is currently trading.