Wedbush raises AAPL price target to $175, expects 'eye popping' earnings

Wedbush has raised its Apple price target to $175 on expectations that the company will announce "eye popping" iPhone shipments and earnings for the December quarter.

In a note to investors seen by AppleInsider, lead analyst Daniel Ives writes that recent Wedbush checks of Apple's supply give indicate that the "iPhone 12 supercycle hype has become a reality."

The analyst believes that the Apple supply chain clocked iPhone builds in the low- to mid-90 millions. That's roughly a 35% increase from Ives' initial iPhone build forecast from 2020.

Ives notes that Wall Street is currently modeling Apple 220 million iPhone units in 2021. Based on Apple's current trajectory, the analyst says that Apple has the potential to sell north of 240 million iPhone units during the year. In a bull case, he adds that a number near $250 million could be on the table.

"Importantly, with our estimation that 350 million of 950 million iPhones worldwide are currently in the window of an upgrade opportunity, we believe this will translate into an unprecedented upgrade cycle for Cook & Co. and represents a 'sweep the leg' moment against the lingering bear camp," Ives writes.

Additionally, Ives says that if Apple continues its momentum, a $3 trillion market capitalization could be on the horizon within a year.

The analyst has raised his 12-month AAPL price target to $175, up from $160. The new target is based on a sum-of-the-parts valuation on Wedbush's 2022 estimates, including a 16x multiple on Apple's Services at $1.2 trillion and a 7x multiple on Apple's hardware business at $1.9 trillion.

A bull case, which Ives says is increasingly likely, is based on those same multiples applied to $1.3 trillion on services and $2.5 trillion on hardware.