Goldman Sachs raises Apple stock price target to $240 based on strength of imminent 'iPhone Xs'

By Stephen Silver

Analysts at Goldman Sachs are taking an "opportunity to eat our hat" on earlier caution about Apple's financial prospects, based on not just what the iPhone X has done, but what they expect the iPhones expected to be announced at the "Gather round" event will do.

A new analyst note from Goldman Sachs seen by AppleInsider on Friday made it clear that the firm is eying the price points of the new iPhones Apple is expected to announce on Sept. 12, as well as those phones' features and the price point of the new AppleCare+ plans that are also expected.

The note, authored by Goldman's Rod Hall, Ashwin Kesireddy, Bala R. Reddy and RK Raghunathan Kamesh, also raises the firm's price target on Apple to $240, while pulling back on the caution they've shown in recent months.

"We also take this opportunity to eat our hat somewhat on our cautious stance this Summer and raise our 12-month price target to $240," the analyst write. "We had expected worse iPhone X demand and some pullback in the stock -- clearly neither of these two things happened. Given the limited upside from here to our new price target we stick with a Neutral rating but Apple is once again proving itself tough to bet against."

Goldman sees Apple unveiling the three-iPhone lineup that is all but confirmed, of a 6.1-inch iPhone 9 (LCD screen), a 5.8-inch iPhone Xs with OLED screen, and a 6.5-inch "iPhone Xs Plus" also with OLED. They expect the 64GB LCD version to be priced at $849, which is higher than the consensus, and argue that "a $699 price point on the iPhone 9 makes little sense for Apple and would drive a FY19 EPS outcome that is below consensus." This puts Goldman's ASP for FY19 higher than the consensus.

In addition, the analysts expect Apple to announce a pair of new AppleCare+ Plans, for the iPhone 9 and the Xs+, which they expect will cost $179 and $219.

"We expect overall mix of AppleCare+ to skew towards higher price plans in CY19 and help Service revenues," added the analysts. "In our central case, we are forecasting CY19 AppleCare+ revenue from iPhones to be ~$7.7 billion, implying 12.7 percent Y/Y growth."

Goldman Sachs, one of the leading firms on Wall Street, initiated regular coverage of Apple's stock in February.