Mike Peterson
Investment bank Wedbush is raising its Apple price target to $350 on what it describes as a robust performance by the company's services, plus prospects of recovering demand and the highly anticipated "iPhone 12."
In a note to investors seen by AppleInsider, lead Wedbush analyst Daniel Ives maintained that there are "darker days" ahead for the economy, but adds that clients should use near-term uncertainty as an "opportunity to buy the stock for the other side of the dark valley."
The analyst notes that investors have come away from Apple's last earnings call focused on the company's "Teflon-like" services sector, despite early concerns of nightmare results and the lack of June quarter guidance. Ives says that the company's services business has been "robust" despite COVID-19, and estimates that it'll hit more than $60 billion of revenue in 2021.
Wedbush also believes that the reopening of Apple's retail footprint and a normalizing supply chain are two signs that the company is starting to lay the groundwork for post-pandemic recovery.
The expected "iPhone 12" lineup later in 2020 should start that recovery, Ives added. Wedbush estimates that roughly 350 million out of Apple's 925 million iPhone user base are in an "upgrade window," which could bode well for the next cycle.
Ives doesn't expect this year's 5G iPhones to debut in the fall, however. Instead, the analyst said Wedbush's current base case assumes that the "iPhone 12" lineup will launch in the November or early December timeframe ahead of the busy holiday season.
The analyst is maintaining Apple's outperform rating, but has bumped its 12-month price target for Apple from $335 to $350, stating that the "eye of the storm is in the rear view mirror" for Apple's supply and demand.
That $350 price target is based on a 9.2x multiple for Services and a 4.3x multiple for Apple's mature hardware and iPhone sector. Wedbush's price-to-earnings multiple is 24.9x for the 2020 fiscal year.
Ives last changed his Apple price target to $335 in March following a broader economic plunge due to coronavirus. That lowered prediction followed two months of investor notes forecasting a $400 price target.
Shares of Apple are currently trading at $317.46 on the NASDAQ, up 0.78% in trading.
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Charles Martin
Malcolm Owen
William Gallagher
Christine McKee
Wesley Hilliard
26 Comments
I wouldn’t mind $350. Not at all.
I think it is much higher than $350 12 months from now. 2021 is lining up to be a breakout year
The stock market is acting like the economic recovery will be quick and painless. We aren’t even at the bottom of this yet. In Illinois the governor is signaling he will extend the lockdown into at least the middle of June. Hospitals are laying off staff because no one is going to the ER, getting routine procedures, or elective surgeries. The news media’s constant drumbeat of fear and doom has frightened people into paralysis. Who the hell is going to go into a restaurant even after the lockdowns are lifted? We have been kowtowed into societal germophobia.
In my own case I’m due for a routine endoscopic exam. I called my gastroenterologist’s office to ask if they were doing procedures now. Yes, but I have to get tested for Covid-19 first and then spend 72 hours in self-isolation before coming in. I told them I would call back.
We are just beginning to see the utter destruction of the economy take hold, Huzzah, we’ll be safe from the virus but we’ll be living in poverty, dependent on the government for our meager existence.
Ok, brace for the rim of the storm then, most ships sink on that (corona second wave could be more deadly than the first, as was the case for the Spanish flu).