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Investment bank JP Morgan has raised its Apple price target to $165 after the Cupertino tech giant broadly beat expectations during the March quarter.
Chatterjee says that the current iPhone 12 and iPhone 12 Pro cycle is driving consumer upgrades and switches and is also positioning apple for a "higher share of the overall smartphone market on account of its leadership in 5G devices."
The iPhone cycle is also setting the Cupertino tech giant up for an acceleration in Services through better leverage of a growing installed base, the analyst adds.
Apple's Mac and iPad lineups are also benefitting from a continued work-from-home and remote learning environment. Chatterjee says that the relevance of higher-performance devices like Apple's M1 Macs and iPads will sustain growth in the category.
The current electronic device demand environment is likely to sustain Apple's iPhone and WFH demand far longer than investors presume at the moment, the analyst adds.
"We believe the larger installed base and the relevance of high performance devices will lead to a higher through-the-cycle volume outlook for all the devices, even as higher engagement in Services is already driving an acceleration to 20%+ growth levels more consistently for Services," Chatterjee writes.
The analyst has raised his revenue and earnings estimates for 2021 based on the strength. In addition, he also raises his out-year iPhone, Mac, iPad, and Services revenue expectations.
Chatterjee revises his 2021 revenue forecast to $359 billion, up from $342 billion, and his earnings-per-share prediction to $5.30, up from $4.60. His new 12-month AAPL price target of $165 is based on applying the same 30x price-to-earnings multiple on the higher 2022 earnings estimate of $5.61.