Why iPhone 11 Demand Will Further Enrich Apple Shareholders

Consumer Electronics

Published: October 9, 2019 11:05 am

Last Updated: January 30, 2020 2:52 pm

Apple Inc. (NASDAQ: AAPL) has been wildly successful with its most recent generation of iPhone, and one analyst sees this significantly boosting the stock. Although there are some headwinds with the current China climate, this firm believes that Apple ultimately will hit at the high end of its guidance for the September quarter.

Canaccord Genuity reiterated a Buy rating and raised its price target to $260 from $240, implying upside of about 16% from the most recent closing price of $224.40.

Based on Canaccord Genuity’s North American survey work, iPhone models maintained leading market share at all four major U.S. carriers, with share up strongly in September driven by the iPhone 11. With the stronger than anticipated initial sales for the launch of this year’s iPhone lineup, the firm believes the September quarter results could come in at the high end of guidance.

Despite near-term headwinds from some consumer willingness to wait for 5G iPhones in 2020 and ongoing trade tensions with China, Canaccord Genuity is encouraged by the stronger than anticipated initial demand for the iPhone 11 lineup and believes Apple will maintain its market share leadership of premium-tier smartphones.

With survey work and supply chain data indicating stronger than expected initial demand for this year’s iPhone lineup, Canaccord Genuity is increasing its September quarter iPhone unit sales estimates from 41 million to 43 million and calendar 2019/2020 iPhone unit sales estimates from 180 million and 198 million to 182 million and 200 million, respectively. The firm also introduced its calendar 2021 iPhone unit sales estimate of 205 million, reflecting the anticipated launch of a low-cost iPhone and 5G iPhones in 2020, with continued strength through 2021 as consumer 5G upgrade cycles take hold.

Along with the continued expectation for the Services segment to double its 2016 revenue in 2020 and sustain double-digit growth through 2021, Canaccord Genuity is increasing its calendar 2019/2020 EPS estimates from $12.21 and $14.91 to $12.29 and $14.94. The firm also introduced its calendar 2021 EPS estimate of $16.75.

Shares of Apple traded up about 1% on Wednesday, at $226.31 in a 52-week range of $142.00 to $229.93. The consensus price target is $227.98.

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