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Canaccord Lowers Apple's Target To $120, Anticipates Recovering Sales With iPhone 7 Launch

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Canaccord Lowers Apple's Target To $120, Anticipates Recovering Sales With iPhone 7 Launch
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According to the most recent Canaccord surveys, Apple Inc. (NASDAQ: AAPL) iPhone customers are holding off on buying new devices until the iPhone 7 comes out. The resulting slump in iPhone average sales price (ASP) is the main reason that Canaccord analyst Michael Walkley has dropped his price target for Apple from $130 to $120.

However, the firm remains bullish on the stock.

“Consistent with late stage cycles of iPhone ahead of a new number launch, we anticipate weaker iPhone ASPs during the June and September quarters,” Walkley explains.

While prices may be on the decline, the firm’s surveys indicate overall sales numbers have remained steady.

Related Link: iPhone 8 Super Cycle Will Drive Apple Shares Up 50%

In the long-term, Walkley believes the iPhone 6 and iPhone 6s has allowed Apple to expand its massive installed base to over 500 million by the end of 2015, which is good news for the company and its shareholders.

“This impressive installed base should drive strong future iPhone replacement sales and earnings, as well as cash flow generation to fund strong long-term capital returns programs of $250B through F2018,” he notes.

Canaccord is anticipating the iPhone 8, which is on tap to be the company’s 10-year anniversary device in 2017, will likely drive a stronger replacement cycle than the iPhone 7 model will.

Apple’s stock has slumped 8.8 percent so far in 2016, but Canaccord maintains its Buy rating.

Disclosure: the author holds no position in the stocks mentioned.

Latest Ratings for AAPL

DateFirmActionFromTo
Oct 2016Goldman SachsMaintainsBuy
Oct 2016Credit SuisseMaintainsOutperform
Oct 2016PiperJaffrayMaintainsOverweight

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