Apple remains favorite tech stock as company gears up for 'monster' growth

Despite supply issues, Apple is geared up for a "monster growth cycle" for 2022 that isn't currently baked into its share price, according to a Wedbush analyst.

In a note to investors seen by AppleInsider, Wedbush lead analyst Daniel Ives writes that the investment bank is seeing strong iPhone 13 demand globally on an elongated product cycle. He calls that a "drumroll to iPhone 14."

Although component shortages are still plaguing Apple, Ives says he is seeing discernible improvements in the company's supply chain heading into the June quarter — a fact that bodes well for Apple's "iPhone 14" release.

On the recently released iPhone SE, Ives is sticking to his assumption that Apple will sell around 30 million units of the entry-level smartphone out of the gates. Between that and the upcoming "iPhone 14," the analyst believes Apple is geared up for "a monster growth cycle over the next 12 to 18 that is not baked into shares at current levels."

China remains a critical region for Apple, and the company is gaining ground there. Wedbush estimates that Apple gained roughly 300 basis points of market share in the past 12 months on the heels of the 5G-equipped iPhone 12 and iPhone 13 lineups.

"While the supply chains issues have curtailed some growth (around 15 million iPhone units) for Apple over the past few quarters on this massive product cycle playing out across its entire hardware ecosystem," the analyst writes. "We believe the pent-up demand story is still being underestimated by investors."

Apple remains a clear favorite among technology, cloud, and cybersecurity stocks, which Ives calls "oversold" categories. The analyst said he strongly recommends investors buy and hold stalwarts in these areas.

Ives maintains his Outperform rating for Apple and 12-month price target of $200, which is based on a sum-of-the-parts valuation on the banks 2022 estimates. The valuation includes an 18x multiple on Services at $1.5 trillion and a 7x multiple on Apple's hardware business at $2.2 trillion.