After the various headwinds associated with the coronavirus delayed the release of Apple’s (AAPL) iPhone 12, the new smartphone was finally unleashed on the market on October 23.
According to Wedbush analyst Daniel Ives’ latest checks, there is robust demand for the new handset, both domestically and in the key Chinese market. In fact, the analyst thinks the Street is underestimating the expected sales for Apple’s flagship product.
“With more order activity kicking in over the last few weeks for iPhone 12 our initial reads are very bullish and give us incremental confidence in our supercycle thesis on iPhone 12,” the 5-star analyst said. “While the Street is forecasting roughly 215 million iPhone units for FY21, we believe based on the current trajectory and in a bull case, Cupertino has potential to sell north of 240 million units which would eclipse the previous record of 231 million units sold in FY15.”
Ives estimates Apple’s supply chain is expecting the delivery of 80 million iPhone 12s during the initial launch period, with the potential to even reach the mid 80's.
The analyst was anticipating 75 million units as the ”line in the sand,” and already eight weeks ago, the figure was “in the 65 million to 70 million range.”
“We have not seen a launch uptrend such as this in a number of years for Apple and the only iPhone trajectory similar would be the iPhone 6 in 2014 based on our analysis,” Ives noted.
Taking the lead times on Apple’s website as an indicator, Ives says “pre-orders tracked more than 2x its predecessor iPhone 11 thus far.”
And with demand in the “key china region” looking “very healthy,” Ives believes this will be the “strongest product cycle for Cook & Co. thus far since iPhone 6 in 2014.”
Accordingly, Ives rates AAPL shares an Outperform (i.e. Buy), while lifting his price target from $150 to $160. The new figure suggests upside of 63% over the next 12 months. (To watch Ives’ track record, click here)
While the rest of the Street, overall, remains positive on Apple’s prospects, not all are entirely convinced. The stock has a Moderate Buy consensus rating, based on 23 Buys, 6 Holds and 1 Sell. According to the $131.39 average price target, there’s potential for modest gains of 7% in the year ahead. (See Apple stock analysis on TipRanks)
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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.