Wedbush bumps AAPL price target to $375 ahead of potential iPhone 'super cycle'

A mix of rock-solid services performance and an expected "iPhone 12" super-cycle have led Wedbush analysts to raise the bank's Apple price target to $375.

In a note to investors seen by AppleInsider, lead analyst Daniel Ives said that sectors like services and AirPods have remained rock-solid amid the coronavirus pandemic, and added that the "iPhone 12" could represent a "1-2 punch" this year alongside the former business.

Services have remained an outperforming sector during COVID-19 lockdowns, on-track to exceed $60 billion in 2021, Ives wrote. AirPods have also maintained their pace, with an expected 85 million units sold in 2020, adding to Apple's wearables sphere along with the "continued success of Apple Watch."

The expected "iPhone 12" lineup, rumored to consist of four devices with at least some supporting 5G, could also provide a headwind to Apple, Ives wrote.

The analyst also said that tensions between China and the U.S. are more likely to be a "headline risk" rather than a true impact to Apple's demand and supply trajectory. That bodes well for the Cupertino tech giant, since Wedbush expects nearly 20% of the company's iPhone upgrades to come from the country.

Wedbush estimates that there are roughly 350 million iPhones in a pent-up upgrade window, and forecasts that Apple is well-positioned to take advantage of the super-cycle opportunity.

Based on Services and iPhone, Ives said that there's a potential chance Apple could be the world's first $2 trillion by market valuation — echoing other analysts.

Going into WWDC season, the analyst predicts iOS 14 to debut with a number of virtual reality enhancements and other improvements. While Ives said he doesn't expect any surprises, he believes Apple may drop some "breadcrumbs" around VR and wearables.

"Cook & Co. have weathered this Category 5. storm in Jacques Cousteau-like fashion," the analyst wrote of Apple's performance during COVID-19.

Ives has upped his Apple price target to $375, up from $350, based on a 9.8x Services multiple and a 4.6x multiple on Apple's iPhone and hardware ecosystems.

The analyst last changed the AAPL price target in March, saying that the "eye of the storm is in the rear view mirror" for Apple's business during COVID-19.

Apple stock returned to its pre-coronavirus price on May 26. At publication time, it is trading at $326.48, off from a $328 high, which if maintained at the close of business, would be a record high for the stock.

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10 Comments

SpamSandwich 32917 comments · 19 Years

About 4 years ago

Here’s to hoping a physical Home button makes a return.

lkrupp 10521 comments · 19 Years

AAPL is at an all time high today ($330.70). Last week Apple overtook Microsoft as the most valuable U.S. company and has remained there through the present. So the price target of $375 doesn't seem that far out of line. Stocks go up, stocks go down. Lather, rinse, repeat.

SpamSandwich said:

Here’s to hoping a physical Home button makes a return.

The ONLY way that happens is if sales are affected and that's not happening. Those who are perpetually 'waiting' to buy until a certain feature is restored are probably not on Apple's radar at all anymore. 3.5mm headphone jack, home button, USB-C, replaceable battery, et al. Keep on waiting... and waiting...

davgreg 1046 comments · 9 Years

Way too overpriced for me to buy.

I smell a bubble.

gmgravytrain 883 comments · 8 Years

Despite all the times an iPhone supercycle has been mentioned, has there actually ever been an iPhone supercycle? What's so great about 5G when most cities in the U.S. don't even have 5G infrastructure. I don't think Samsung has sold very many 5G smartphones even with the nearly year lead advantage over Apple. I simply wouldn't think that many people would need 5G speeds especially if they have to pay a premium for it. Anyway, I'm glad Apple's share price has gone up as high as it is and that it took back the market cap crown from Microsoft.

It's funny how the other day an analyst wrote about how Microsoft was definitely going to beat Apple to the $2T mark within the next two years or so because of Microsoft's unstoppable Azure Cloud business. Not that it really matters, but it's so weird the numbers that are being thrown around when a couple of years ago, analysts were saying that it would be nearly impossible for companies to reach $1T, especially Apple. I kept hearing about the "law of large numbers" used in terms of the stock market, which supposedly meant companies could only become so valuable and then would quickly fall in value. Now they talk as if $2T isn't very hard at all to reach. Whichever company reaches $2T first will really be amazing. I had thought it would be Amazon because Jeff Bezos wants to rule the world and, of course, the highly praised AWS.

This is just a chart of Apple's climb to being the king of market cap stocks and it is some amazing climb:

https://www.macrotrends.net/stocks/charts/AAPL/apple/market-cap

If outstanding share count remains as it is, (4.33B) when Apple is $375 a share, it only puts the market cap to around $1.6T so $2T will still be a long way off. Still, some crazy numbers when you think about it.