Avi Silver Getting 'Increasingly Comfortable' With iPhone 7 Cycle, Raises Apple's Target From $120 To $130

With the promotional activity of U.S. carriers becoming incrementally aggressive, CLSA’s Avi Silver expressed increasing comfort with the iPhone 7 cycle.

Silver maintained a Buy rating on Apple Inc. AAPL, while raising the price target from $120 to $130.

“As wireless customers enjoy the most compelling value proposition in years (25 percent lower cost for service/iPhone), it is likely to stimulate the recently depressed upgrade rates for US carriers,” the analyst mentioned.

Related Link: Mobile Carriers Making The Most Of iPhone 7 Mania

Multiple Tailwinds

Apart from the incredibly favorable carrier subsidies, Silver also noted various other tailwinds for the iPhone 7, including the robust preorder data and commentary, as well as some of the initial channel fill shifting from the September quarter to the December quarter.

In addition, with Samsung having to recall its Galaxy Note 7, along with the extra week in the December quarter and a “generally more favorable view of the new product post launch,” Silver raised the iPhone unit estimates for the December quarter and FY17 from 72.5 million to 75.7 million and from 214.8 million to 221.0 million.

The EPS estimates for FY17 and FY18 have also been raised.

Silver believes that the stronger iPhone 7 cycle was going against the playbook of many investors who had expected Apple to remain materially underweight till March-April 2017.

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