Apple Inc. shares are off more than 16% from their January highs, but one analyst argues that investors should take advantage of the dip to seize upon a “golden buying opportunity.”
Wedbush’s Daniel Ives added Apple
AAPL,
to his company’s “best ideas” list Wednesday, writing that there’s room for the company to positively surprise Wall Street with its iPhone results this fiscal year.
Apple’s stock edged 0.2% lower in morning trading Wednesday. It has rallied 69.4% over the past 12 months, while the Dow Jones Industrial Average
DJIA,
has advanced 28.6%.
Ives said that concerns about cuts to this year’s iPhone forecasts have pressured the stock lately, but he sees opportunity for upside. Though the FactSet consensus now calls for 224 million iPhone units to be sold this fiscal year, Ives argues that the company could sell more than 240 million given strong demand in Asia and a large base of iPhones globally that are ripe for upgrades.
See also: Apple eclipses Samsung as top smartphone vendor for the first time in four years, says Gartner
He wrote average selling prices should benefit as Apple seems to be having success selling more expensive iPhone models like the iPhone 12 Pro and iPhone 12 Pro Max while the iPhone 12 Mini is being “significantly scaled down around production/demand globally.”
Nikkei Asia reported Wednesday that Apple was making dramatic cuts to its prior iPhone 12 Mini production plans from December while making “comparatively mild” cuts to other iPhone models, partly because some components and parts once meant for the Mini are being shifted over to the more expensive models.
The new production targets are still slightly above Apple’s shipments from the same period a year ago, the report said, while citing some unnamed sources who said Apple’s cuts come after the company may have been especially aggressive with its targets months ago to ensure it would have enough components at a time when some were in short supply.
Apple didn’t immediately respond to a MarketWatch request for comment.
Ives remains upbeat about Apple’s iPhone prospects, arguing that the “supercycle party” could continue with the iPhone 13 expected out this fall given optimistic supply-chain indications. He has “increased confidence that iPhone 13 will have a 1 terabyte storage option which is double from the highest Pro storage capacity today,” suggesting Apple could have more pricing opportunity.
He has an outperform rating and $175 price target on the stock.
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Analysts at IDC forecast Wednesday that overall smartphone shipments could rise 5.5% in 2021, fueled by greater availability of 5G-enabled devices and “pent-up demand” for new phones. For 2020, IDC had calculated that smartphone shipments dropped 5.9% from a year before.
