Stifel Raises Apple PT Following China Mobile Support

In a report published Thursday, Stifel analyst Aaron Rakers maintained a Buy rating on Apple AAPL and raised the price target from $600 to $650. Apple announced a multi-year agreement to have China Mobile support the iPhone 5s/5c, with a focus on China Mobile's 4G TD-LTE rollout throughout 2014 and beyond. 4G TD-LTE services are currently available in 16 cities in China, with an anticipated 340cities to be covered by the end of 2014. This announcement shortly followed China Mobile's official TD-LTE launch last week. Although the details of the deal are not yet disclosed, many analysts note the important growth driver from this deal. Rakers retains his estimate that the incremental EPS from China Mobile could total $4 to $8 per share after the first year. Stifel did not change their forward estimate, noting the potential for an up to $10 million incremental iPhone sales to materialize in March 2014. The analyst commented on the number of subscribers across China Mobile user base totaling 763.3 million compared to China Unicom's 278.6 million and China Telecom's 185.5 million. "We believe investors should/will question how we should think about the true subscriber base legitimately positioned to upgrade to an iPhone and/or how many of China Mobile's subscriber base is already using unlocked iPhones," Rakers continued, "there have been questions surrounding China Mobile's 3G subscriber base as it relates to full 3G data plan usage versus the extensive usage of China Mobile's Wi-Fi (possibly a reasoning for Apple's press release to also highlight China Mobile's 4.2 million Wi-Fi access points – thus pointing out both the 1.2 million cell network coverage and Wi-Fi coverage quality networks to support the iPhone 5s/5c customers)." Retail availability of the iPhone by China Mobile will commence on January 17, 2014 and pre-registration is available on the company's website on December 25. Apple closed at $549.02 on Friday and shares are currently trading up 2.80% at $564.39.