Shares of Apple touched a new record high of $399.73 in intraday trading on the Nasdaq on Monday, with the company’s market valuation crossing $1.7 trillion for the first time ever.
Technology sector analysts, including Daniel, lifted their price target on the stock on optimism around the expected launch of its 5G-enabled iPhone 12 later this year.
“The stage is setting up for a massive pent-up iPhone 12 cycle heading into the fall in this key region (China) as well as globally,” says Daniel Ives, Managing Director, Equity Research, Wedbush Securities.
Daniel raised his target on Apple shares by nearly 13 percent to $450, suggesting a 17 percent upside potential to the stock’s Friday, July 10 close of $383.68. His bull-case target of $525 implies Apple shares have the potential to surge nearly 37 percent from its Friday, July 10 close, suggesting market valuation could soar well past $2 trillion.
“Our recent Asia checks and supply chain contacts are giving us increasing confidence in the iPhone 12 growth story with strong underlying momentum into CY21 on the heels of iPhone 12 which remains the linchpin to our “5G super cycle thesis” on Apple,” he adds.
5G is expected to be a key ingredient in Apple’s next chapter of growth and will be a major factor driving the expected boost in its market valuation to $2 trillion by 2021, adds the Wall Street tech analyst.
Apple’s India market
The India market too could play a significant role in how quickly Apple reaches the $2 trillion market capitalisation mark, Daniel tells YourStory.
“We are seeing a change in India and with more consumers not buying Chinese smartphones, we see Apple gaining major share in the market over the coming year,” the analyst says.
In late June, the India government banned as many as 59 Chinese apps, including popular ones such as WeChat, Helo, and TikTok, terming their usage ‘prejudicial to sovereignty and integrity of India, defence of India, the security of the state, and public order.’
“India has been a tough nut to crack for Apple, and any incremental success here would be a huge feather in the cap towards reaching the $2 trillion mark,” Daniel tells YourStory.
Demand for 5G-enabled iPhone 12
In mid-to-late September, Apple is expected to launch four models for iPhone 12, with a mix of 4G/5G, at price points that could potentially be lower than $1,000 on some versions despite the additional 5G component, according to Daniel.
“The supply chain getting back to normalisation ahead of expectations has been impressive and now ultimately puts Cook & Co. back in the driver’s seat to launch this 5G cycle in its typical mid-late September timeframe with the smartphones hitting the shelves/ website by early October,” says Daniel.
The veteran tech analyst adds that his supply chain checks indicate that no wired EarPods and chargers will be included in the iPhone 12 box, which in turn could create more cross-selling opportunities for AirPods over the coming year.
He estimates Apple is on “an eye-popping trajectory” to sell around 90 million AirPod units, up significantly from 65 million in 2019.
Apple shares have already surged around 34 percent since the start of this year, on the back of optimism surrounding its new generation 5G iPhones as well as strong momentum in its services business, which includes the App store, the recently launched Apple TV+, Apple Music, and Apple Pay.
Daniel assumes the services business will have a $600 billion to $650 billion valuation range, citing “…the increasing importance of this key revenue stream that is getting a new appreciation by investors during this COVID-19 pandemic, as Cook & Co. continue to flawlessly execute on the vision.”
Apple is due to announce its quarterly earnings for its fiscal third quarter on July 30.