Analyst: Apple Stock Could Soar to $240
Following Apple's (NASDAQ: AAPL) iPhone launch event last week, Wall Street analysts shared some insightful thoughts on the new products and their potential to help the tech giant's business. In general, analysts seem quite bullish after watching Apple's latest product announcements. Several analysts even raised their 12-month price targets for the stock.
Among the most optimistic analysts was one from Wedbush Securities. The firm's managing director of equity research, Dan Ives, said he thinks the stock could soar about 38% from its current level over the next 12 months. Given the substantial upside Ives expects from the stock, it's worth taking a look at the reasoning behind his bullishness to see if the reasoning is sound.
The path to $240
Ives raised his target for the stock to $240, up from $230 previously. To explain his high target and his "outperform" rating on the stock, he said his iPhone supply chain checks pointed to a healthy supply chain for the iPhone. This, of course, would support robust sales levels. In addition, he thinks mobile phone carrier promotions will be aggressive, serving as "a major catalyst for upgrades into the holiday season." Finally, the analyst pointed to China, where he thinks the tech company has "incredible momentum."
The analyst had previously said he expected the latest iPhone Pro model to drive a "mini super cycle" in terms of sales. Based on his note following the event, the launch apparently didn't disappoint Ives.
At its Sept. 12 event, Apple unveiled the iPhone 15, iPhone 15 Plus, iPhone 15 Pro, iPhone 15 Pro Max, Apple Watch Series 9, Apple Watch Ultra 2, and upgraded second-generation AirPods Pro. Customers can get their hands on these products as early as Friday, Sept. 22. Ives seems particularly bullish on Apple's new iPhone Pro, which features a new titanium design, an A17 Pro chip, a new action button that replaces the single-function switch for silent mode, and more.
Interestingly, a more recent analyst note corroborates with Ives' projection for strong iPhone 15 demand this year. Credit Suisse's Shannon Cross pointed out that estimated delivery dates for new orders of the new iPhone 15 Pro Max are already substantially longer than they were following the launch of new iPhone models last year. Specifically, the longer lead times imply higher demand for this year's iPhone 15 Pro Max over last year's iPhone 14 Pro Max, Cross suggests. The analyst, who has a $220 price target on the stock, thinks aggressive discounting from carriers and a large number of customers with three-year-old iPhones is helping drive outsize demand for the new device.
Why iPhone can move the needle for Apple
While there's no way to know yet if Ives' optimism for the iPhone is on point, one thing is clear: if the iPhone does do well, it will likely be good news for Apple shareholders. Why? Apple's iPhone remains the company's biggest segment by far. Of the Cupertino-based company's $394 billion in fiscal 2022 revenue, more than $205 billion came from iPhone sales. Even more, Apple has indicated that its iPhone business is its most profitable hardware segment, so it has an outsize impact on profit.
While we'll have to wait until Apple announces its fiscal fourth-quarter results to know for sure whether iPhone 15 is off to a better start than iPhone 14 was, Ives' supply chain channel checks combined with the fact that iPhone Pro Max delivery estimates are already pushing into November do offer some clues; the iPhone 15 and 15 Pro lineup is probably going to be a hit.
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Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.
