FBR, Bernstein Continue To Like Apple (And The iPhone)

Apple Inc. AAPL fans have been engrossed with the new Apple Watch, but Apple investors are still excited by iPhone 6 sales growth, specifically in China. Looking back at the first quarter of 2015, Apple CFO confirmed that Apple sold more iPhones in China than in the U.S for the first time, partially thanks to the Lunar New Year and to China’s growing middle class.

Research notes from both FBR Capital and Citigroup indicate that Apple is gaining a larger market share with the iPhone 6, including people who are buying an iPhone for the first time and those who are upgrading to the iPhone 6. Investors are pleased that Apple is growing their market share and increasing customer retention.

Furthermore, investors have been keeping an eye on Apple’s legal battle with Samsung. The two tech companies are in the midst of a patent infringement argument with Apple accusing Samsung of infringing on its design patents. This week, a federal appeals court upheld Samsung’s patent infringement violation but reversed the trade dress damages, which was valued in more than $400 million.

According to Smarter Analyst, Daniel Ives of FBR Capital reiterated an Outperform rating on Apple with a $185 price target on May 18. Ives estimates that “China will overtake the Americas as [Apple’s] top geographic region by revenue in FY17” due to “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.” Ives believes Apple is poised to capitalize on “over a $150 billion TAM from China smartphone shipments over the next few years.” Ives concludes that Apple still has plenty of room to grow in China thanks to “its strong product ecosystem and secular tailwinds front and center.”

Daniel Ives has rated Apple five times since March 2015, earning an 80 percent success rate recommending the stock with a +2.3 percent average return per AAPL rating. Overall, Ives has a 68 percent success rate recommending stocks with a +9.5 percent average return per rating.

Separately on May 18, Toni Sacconaghi of Bernstein maintained a Buy rating on Apple with a $142 price target. Sacconaghi is bullish due to the acceleration in iPhone sales since the launch of the iPhone 6. However, the analyst questions “whether this is result of an accelerated replacement cycle among existing iPhone users or due to increased first time iPhone buyers (switchers or new smartphone users).” The analyst suggests that recent iPhone sales are attributed to new users, but there are also figures that support strong iPhone replacement rates.

Toni Sacconaghi has rated Apple 62 times since January 2009, earning an 82 percent success rate recommending the stock with a +30.2 percent average return per AAPL rating. Overall, Sacconaghi has a 71 percent success rate recommending stocks with a +23.3 percent average return per rating.
On average, the top analyst consensus for Apple on TipRanks is Moderate Buy.