Skip to main content

Market Overview

PacCrest: Apple's iPhone Growth Could Shrink, But It Won't Hurt Investors

PacCrest: Apple's iPhone Growth Could Shrink, But It Won't Hurt Investors

Pacific Crest's Andy Hargreaves said in a new research note that Apple Inc. (NASDAQ: AAPL) will see iPhone sales decline in 2016, but that's not a bad thing. Specifically, Hargreaves said it will not impact Apple's free cash flow or customer loyalty. Instead, the issue is one that is "transitory."

More generally, the note predicted, "The smartphone is likely to remain the most important device in the world and iPhone dominates the high end of the category." That means that there will be "extraordinary business value for several years."

Related Link: iPhone Demand & China: Why Jefferies Cut Apple's Price Target

The largest unknown for Hargreaves is whether Chinese demand for iPhones will hold up. The note pointed out that China drove nearly 65 percent of Apple's operating profit in the last two quarters – a level that seems unlikely to sustain. However, "we lack strong evidence to support a view of deceleration." Data also does not exist to help PacCrest forecast the size of the used installed base or the "propensity to upgrade new devices." Those will be key moving forward.

On a risk/reward basis, Hargreaves forecast that a bearish scenario would have fair value at $110, a roughly 5 percent decline from Friday's close of $115.96. To the upside, Pacific Crest said that prices should rise 20 percent to $139 within 12 months.

This year, Apple shares have traded to a high of above $130 (52-week high of $134.54) on multiple occasions before coming off those levels. Last week, shares traded down to $110 on Wednesday morning before rallying through the rest of the week.

Latest Ratings for AAPL

Feb 2021RBC CapitalAssumesOutperform
Jan 2021DA DavidsonMaintainsBuy
Jan 2021Deutsche BankMaintainsBuy

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings


Related Articles (AAPL)

View Comments and Join the Discussion!

Posted-In: Andy Hargreaves iPhone iPhone 6Analyst Color Reiteration Top Stories Analyst Ratings Tech Best of Benzinga

Latest Ratings

FSRMorgan StanleyMaintains40.0
MEDDA DavidsonMaintains302.0
VICRBWS FinancialMaintains120.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at