Market Overview

Credit Suisse Keeps Apple's $150 Target Despite Expected Weak iPhone Launch

Credit Suisse Keeps Apple's $150 Target Despite Expected Weak iPhone Launch
Related AAPL
Julian Assange's 'Sonic Screwdriver': Latest WikiLeaks Disclosure Says CIA Injected Spy Software Into Mac Chips
Needham Downgrades Apple...To Buy
Markets Rise Modestly Ahead Of RyanCare Vote; Nvidia Jumps (Investor's Business Daily)

Despite expectations of a weaker product cycle in the near term, Credit Suisse’s Kulbinder Garcha believes Apple Inc. (NASDAQ: AAPL) offers a favorable risk/reward profile.

Garcha reiterated an Outperform rating on the company, with a $150 price target.

“Given high retention rates, a superior ecosystem, and a multi-product compute advantage, we believe FCF of ~$67bn should be sustainable LT,” the analyst mentioned.

Muted iPhone 7 Cycle

However, analysis of the installed base suggests that the iPhone 7 cycle is likely to be muted, although it's expected to be followed by an iPhone 8 “Super Cycle” in 2018.

“Our installed base analysis shows iPhone units troughing in 2016 at 207mn before rising to ~250mn in 2018 driven primarily by a quickening replacement rate of 30 months in 2018 from 32 months in 2017,” Garcha explained.

Related Link: Forget The iPhone 7, Should Apple Bulls Wait Until The iPhone 8 Is Released?

Investor Concerns

The analyst also pointed out that there have been investor concerns that the innovation driving this super cycle might not be sufficiently significant, since many Android devices also come with the expected features.

On the other hand, Garcha believes the market is still to appreciate Apple’s services, stating that “over time, it should become apparent as Services GP grows from 15 percent of Corporate GP today to ~30 percent by 2020, even without a major acquisition.”

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for AAPL

Mar 2017NeedhamDowngradesStrong BuyBuy
Mar 2017NomuraMaintainsBuy
Mar 2017BernsteinMaintainsOutperformOutperform

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings

Posted-In: Credit SuisseAnalyst Color Long Ideas Reiteration Top Stories Analyst Ratings Tech Trading Ideas Best of Benzinga


Related Articles (AAPL)

View Comments and Join the Discussion!