Encouraging iPhone Data Leads PacCrest To Lift Apple's Price Target

Pacific Crest Equity Research Analyst Andy Hargreaves maintained an Overweight rating on Apple Inc. AAPL with a price target boosted from $140 to $150 after conducting iPhone related checks.

According to Hargreaves' checks with Apple's suppliers, the iPhone maker could place orders with members of its supply chain for at least 100 million high-end iPhone devices in the bottom half of 2017. As such, the analyst boosted his iPhone unit estimates for the September-ending quarter (fiscal Q4) from 48 million to 50 million and also increased his December-ending quarter unit estimates from 78 million to 80 million.

Favorable Mix

Hargreaves' checks also indicate the highest-priced iPhone ("iPhone 8/X") could represent half of the total high-end component volume. The analyst acknowledged this figure could be "aggressive" given the likelihood of a high price (some reports suggesting $1,000 cost). But the analyst is confident enough to now estimate that 30 percent of iPhone sales will be the highest-end model, up from a prior estimate of just 13 percent.

The more favorable sales mix estimate is reason enough for Hargreaves to boost his price target on Apple. Specifically, the analyst revised his fiscal 2017 earnings per share estimates higher from $8.90 per share to $8.92 per share, while his fiscal 2018 earnings per share estimate was also revised higher from $9.74 per share to $10.05 per share.

Bottom line, the analyst highlighted the potential for further upside to his unit estimates but did caution the path for Apple's stock beyond $150 requires tax reform and increases to Apple's dividend.

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