RBC raises Apple price target to $123, cites higher than expected iPhone 6 demand
Neil Hughes
RBC Capital Markets on Friday advised investors to stay long on Apple stock, as the investment firm sees multiple catalysts for the company in the near future, starting with the reporting of holiday iPhone sales.
With Apple's December 2014 quarterly earnings report fast approaching, analyst Amit Daryanani issued a note to investors on Friday, a copy of which was provided to AppleInsider, in which he raised his AAPL price target to $123, up from $120. In particular, he has big expectations for the company's flagship iPhone 6 and iPhone 6 Plus lineup.
Daryanani believes Apple experienced higher than expected demand for its latest handsets in the December quarter. He pegged buy-side expectations at between 67 million and 68 million iPhones shipped in the holiday quarter, which would be a significant bump up from RBC's own forecast of 64 million units.
The analyst believes the vast majority of iPhones sold in the quarter — Â more than 80 percent — will be the new iPhone 6 and iPhone 6 Plus. He also expects the average selling price to be around $700, bolstered by increased storage options and the $100 premium carried by the iPhone 6 Plus.
Looking forward to the March quarter, Daryanani said that buy-side investors expect Apple to ship between 47 million and 50 million iPhones in the current frame. RBC's own estimates peg shipments at 50 million in the March quarter.
RBC's new $123 price target also reflects future catalysts like the growth of Apple Pay and the upcoming debut of the Apple Watch. Daryanani also noted Apple's typical annual capital reallocation efforts, which are likely to occur in March or April.
RBC has also advised investors of an "upside scenario" for AAPL stock, where it sees shares propelling to $135. Shares of Apple opened at $106.82 on Friday, suffering losses this week after the stock was downgraded by a high-profile Japanese bank.
Andrew Orr
Marko Zivkovic
Wesley Hilliard
Malcolm Owen
Amber Neely
27 Comments
Upgrade: meh. Downgrade: sale sale sale. Only for Apple!
Way too much emphasis on iPhones alone with these stock calls. Meanwhile Beats sucks, and no new Apple TV. No original content for iTunes like Amazon has i e, Golden Glove best series and now Woody Allen. Digital music is way down. Apple Is way too much leveraged on its iPhone alone.
Juggernaut
I think Apple has been pretty clear that they have no interest in getting into the original content business. And Amazon has yet to demonstrate that all the money they're spending on original content is actually increasing prime membership or contributing to the bottom line at all. I doubt investors care about an Amazon TV program winning an award.
I personally tend to side with the analysts who are forecasting AAPL's rise over the next few months.
One reason is that with the iPhone 6 Apple did not simply upgrade its phone. Rather, Apple entered a whole new product category, the phablet. True, Apple chose not to call the iPhone 6 Plus the iPhablet, but they could have. This is a previously untapped revenue stream for the company.
Other potential catalysts driving AAPL higher include the App Store (the sales of which rose by 50% in 2013), Apple Pay (very quickly expanding), and the watch of course.
I think most analysts are greatly underestimating the potential of smart watches AND other devices.
Finally, I think that Samsung and Android have peaked. The only have market share and sales to lose, while Apple has MUCH to gain. Look what a difference only a few % points market share gains make, when you're Apple, and when it comes to profits.
I wish I had cash to buy more shares of AAPL.