FBR: Apple's China Opportunity Is 'Massive,' Still In Early Stages

In a report published Monday, FBR & Co analysts maintained their Outperform rating and price target of $185 on Apple Inc. AAPL. China could prove to be a major growth driver for the company going forward.

The analysts believe that although the company's geographic footprint has largely been in the Americas and Europe, China has the potential to overtake the Americas in terms of revenue by FY17, "given our expectations for continued iPhone share gains among Chinese consumers/enterprises, with the broader Apple ecosystem of devices/services also representing a major cross-sell opportunity."

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The company's management had earlier indicated that it intended to double the number of stores in China to 40 by mid-2016. Apple also intends to make further channel investments to broaden its distribution network in the country.

"Apple has clearly ramped China revenue, and we believe it is poised to capitalize on what we estimate is over a $150 billion TAM from China smartphone shipments over the next few years, with the potential for solid upside to Street numbers in the next few quarters coming from strength from the new iPhone 6/6 Plus, Apps Store, and Apple Watch," the analysts said.

According to the FBR & Co report, the potential that China offers in terms of growth for Apple is still underappreciated by the market. "We anticipate that Apple can capitalize on its current "white-hot momentum" in the region and penetrate further into the country with its strong product ecosystem and secular tailwinds front and center," the report added.