UBS On Apple: The Positives Still Outweigh The Negatives, Raise Price Target To $210

Despite "tepid" iPhone demand and other concerning read-outs, there are still plenty of reasons to like Apple Inc. AAPL's stock, according to UBS.

The Analyst

UBS' Steven Milunovich maintains a Buy rating on Apple's stock with a price target lifted from $190 to $210.

The Thesis

UBS' proprietary "Evidence Lab Global Smartphone Survey" paints a bullish picture for Apple's stock, Milunovich said in a Friday report.

A survey of 6,700 consumers across five countries found weak-but-rising iPhone buying intentions, the analyst said.

An ongoing narrative shift is underway in iPhone unit growth to a "consistent franchise" characterized by low single-digit hardware growth augmented by higher-margin and faster-growing services revenue, Milunovich said. 

Here's a summary of other findings from the UBS survey. 

The Negatives

  • iPhone buying intent is down from a year ago in the U.S., but flattish in the U.K. and China.
  • The average handset age is rising in every region surveyed except for China.
  • Longer upgrade cycles appear to be the norm, as customers holding onto their phones longer limits near-term growth.

The Positives

  • More than 40 percent of those surveyed who plan to buy a new iPhone intend to purchase the iPhone X.
  • A larger number of consumers who aren't buying the latest iPhone 10 cycle are looking to buy an older "Plus" iPhone.
  • Consumers in developed countries still want to upgrade their iPhone every other year, which may imply upside to the Street's 1-percent estimated iPhone unit increase in fiscal 2019.

Price Action

Apple shares were up 1.36 percent at $189.40 at the time of publication Friday. 

Related Links:

KeyBanc: What To Expect From Apple's WWDC Presentation

Maxim Group: Apple's Long-Term Services Business 'Not Attractive Enough' For Bullish Rating

Photo courtesy of Apple. 

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