Sell-side’s optimism concerning Apple, Inc. AAPL has been on the rise. Earlier this week, Goldman Sachs initiated the stock with a Buy rating and a $199 price target.
The Apple Analyst: Wedbush analyst Daniel Ives maintained an Outperform rating on Apple shares and raised the price target from $180 to $190. The firm retained Apple in its “Best Idea List Name.”
The Apple Thesis: Wedbush’s Asia iPhone supply chain has been “incrementally more positive,” suggesting a modest increase in demand, Ives said. The analyst noted that a clear demand rebound has been happening in China after December.
Pointers from January and February and early indications from March show a steady iPhone trend as opposed to the supply-constrained December quarter due to China COVID-19 issues, he added.
The analyst said there haven’t been any major unit cuts from suppliers in Asia, reflecting a steady demand curve on the flagship iPhone 14 Pro in the March and June quarters.
Apple is also gaining market share in the China region, while demand in the U.S. and Europe is holding up well, he said. And about 25% of the current iPhone installed base hasn’t upgraded their iPhone in over four years, he added.
The analyst sees the average selling price rising toward $900.
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Aside from the iPhone, the analyst expects the company’s Services business to accelerate in 2024. He estimates that the overall Services business is worth $1.2 trillion to $1.3 trillion for Apple’s sum-of-the-parts valuation. The Services business remains “an underappreciated asset by the Street.”
Ives said a number of levers potentially abound for Apple, including:
- Apple Glass-AR/VR headset launch by summer timeframe
- Hardware subscription plan
- More Services bundling options
- New hardware launches on the Mac product line in 2023
“The golden installed base of Apple is creating more stability in this uncertain macro and remains key to our bullish thesis,” Ives said.
Apple Price Action: In premarket trading on Wednesday, Apple shares were edging up 0.31% to $152.07, according to Benzinga Pro data.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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