This year has been a huge year for Apple, Inc. AAPL and its shareholders. However, one Wall Street analyst said Friday that Apple’s 5G iPhones could drive another big year for the stock in 2020.
The Analyst
Piper Jaffray analyst Michael Olson reiterated his Overweight rating for Apple and raised his price target from $290 to $305.
The Thesis
Olson said Apple will likely start shipping its first generation of 5G iPhones in the second half of 2020. A recent Piper Jaffray survey of 1,000 iPhone users found that 23% are interested in a high-end 5G iPhone priced at $1,200. Olson said this level of demand this early in the 5G upgrade cycle is bullish for Apple.
“Looking into the coming year, Apple is in the midst of a perfect storm, with the current iPhone appearing to perform at-or-above plan, non-iPhone (especially wearables & services) trending better than expected through the end of FY19 and likely into the holidays, as well as growing anticipation for 5G iPhones coming late in the fiscal year,” he wrote in a note.
Olson said the survey results are likely a conservative estimate of initial 5G iPhone demand given Apple will likely also have a $999 version as well.
Even after Apple’s 80% gain in 2019, Olson said Wall Street isn’t fully appreciating the 5G opportunity. He said calendar 2021 will likely see the largest impact from 5G iPhone sales, and stronger-than-expected demand could drive upward revisions to his 1% iPhone revenue growth estimate for 2021.
Benzinga’s Take
Apple’s bull case has been increasingly driven by Services segment revenue growth and increasing monetization of its existing iPhone user base rather than iPhone unit sales growth. However, if the 5G iPhone capabilities are impressive enough to drive a massive global upgrade cycle, 2020 and 2021 could be huge years for Apple investors.
Apple'e stock traded around $281.82 per share at time of publication.
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