After the production woes that marred Apple’s (AAPL) December quarter’s results, it looks like demand for the iPhone 14 remains robust.
According to Wedbush analyst Daniel Ives, despite the cloudy macro backdrop, recent Asia checks show that demand remains “very stable” whilst notably there have also been no major production cuts. “While Apple clearly has benefited this quarter from December unit shortages that slipped into January/February,” the 5-star analyst went on to explain, “we have seen China iPhone demand in particular see a clear tick up this quarter with a strong month of March and is music to the ears of investors.”
While demand in Europe and the US appears to be holding up well, as Ives notes, it’s in China where Apple looks to be making headway; over the last 12 months, the iPhone has been gained market share there (~300 bps). And with Ives reckoning that around 25% of iPhone users still yet to upgrade their handsets over the past 4 years, the stage is set for the upcoming launch of the iPhone 15. This “highly anticipated anniversary edition” will get a release around September, and given the demand trends seen recently, Ives thinks the “baton handoff from iPhone 14 to iPhone 15 looks to be a ‘steadier transition’ than some other peak to valley iPhone cycles of the past.”
Before that, however, there are potentially other catalysts that could help send AAPL shares higher. Apple’s WWDC event will take place in June and the company could finally unveil the long-awaited Apple Glass-AR/VR headset while the Mac product line could also see some new hardware releases announced. Those developments aside, a hardware subscription service could also be unveiled over the coming months. This could be a “catalyst and potential drive cross-sell on the service front.” Lastly, Apple would not like to miss out on the AI craze and Ives believes that this fall, a new AI functionality could be introduced into the Apple ecosystem.
So, down to business, what does it all mean for investors? Ives maintained an Outperform (i.e., Buy) rating and on the back of the positive iPhone checks, while raising his price target from $190 to $205. That figure implies 25% upside from current levels. (To watch Ives’ track record, click here)
Elsewhere on Wall Street, AAPL stock receives an additional 22 Buys, 5 Holds and 1 Sell, all coalescing to a Moderate Buy consensus rating. Having gained 26% year-to-date, most think the shares have climbed enough for now; going by the $170.73 average target, there’s room for just 4% upside over the coming months. (See Apple stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
