3 Apple Analysts Lift Price Targets: Why They're Optimistic On iPhone's Trajectory

Apple Inc. AAPL analysts are projecting that Cupertino will weather the coronavirus pandemic and emerge in good shape.

The Apple Analysts

BofA Securities analyst Wamsi Mohan reiterated a Buy rating on Apple shares and lifted the price target from $320 to $340.

Deutsche Bank Securities analyst Jeriel Ong maintained a Buy rating and increased the price target from $305 to $320.

Jefferies analyst Kyle McNealy maintained a Buy rating and raised the price target to a Street-high $370.

BofA Sees Continued Growth In iPhone Installed Base

Apple's global iPhone installed based of 1 billion units at the end of 2019 and the 9% CAGR growth of the iPhone installed base over the past two years, driven by strong double-digit growth in the used iPhone installed base, are key indicators of the potential of the Apple ecosystem, BofA's Mohan said in a Wednesday note.

The analyst expects the future installed base to come largely from the used phone market, with the new iPhone installed base likely to remain flat to slightly down.

A large installed base can eventually drive higher consumption of services and sales of incremental devices due to the halo effect, he said.

Mohan also sees secondary market growth presenting a large services opportunity.

BofA based its bullish stance on strong services revenue growth, continued penetration into installed base, large net cash balance and continued strong potential capital returns.

"The confidence that the IB for iPhones can be stable to growing should provide comfort to investors that iPhones are unlikely to get disrupted in the foreseeable future and hence drive ~200mn upgrades annually, which combined with growing services drives a premium multiple."

Deutsche Bank Bullish On Apple

Apple's store reopening plans are a directional sign of improving trends and a drift toward a more normalized demand environment for the company, Deutsche Bank analyst Ong said.

With the company deciding to open 100 more retail stores in 21 states in the U.S. this week, about 130 Apple stores will be open in the U.S., the analyst said.

"While high unemployment and smaller consumer pockets have us worried for the next-gen iPhone launch that typically comes in September/October, we continue to tilt bullish on AAPL."

Street iPhone Estimate Conservative, Jefferies Says

Street expectation for iPhone shipments for the June quarter appear conservative, especially as the company is seeing strong growth through online channels, Jefferies analyst McNealy said, according to MarketWatch.

The analyst is also sanguine about the recently launched iPhone SE model.