After a not-so-enterprising first-half, Apple, Inc. AAPL shares may be getting ready to take off in a big way, according to a JPMorgan analyst.
The Apple Analyst: Samik Chatterjee maintained an Overweight rating on Apple shares and increased the price target from $165 to $170.
The Apple Takeaways: Apple shares are up a modest 5% year-to-date compared to the 16% jump by the broader market, Chatterjee said in a note.
The underperformance in the first half has come despite resilient fiscal year 2021 iPhone volume expectations, the analyst said.
The softness may be due to limited catalysts after the December quarter of 2020, he said.
Historically, Apple shares outperform heading into the September iPhone launch event, Chatterjee said.
The magnitude of outperformance in the July-September quarter is generally driven by investor expectations heading into the next iPhone cycle, the analyst said.
The setup is attractive and Apple shares are positioned for a significant outperformance over the next two to three months given the first-half underperformance as well as the near-term upside on volume expectations for iPhone 12 series from recent share gains, particularly in China, he said.
Related Link: Why Apple's Stock Valuation Could Present Long-Term Buying Opportunity
Second, the outperformance beyond the September launch will likely be supported by iPhone 13 volumes outperforming relatively low investor expectations, Chatterjee said.
The Phone 13, similar to the iPhone 11 cycle, is poised to outperform relative to muted expectations due to a multi-year 5G tailwind to the replacement rate and a larger installed base supporting stronger run-rate of annual volumes, the analyst said.
Investor expectations for iPhone volume in fiscal year 2022 are in the range of 210 million to 215 million, he said, versus JPMorgan's estimate for 226 million units.
With Apple shares poised to outperform the broader market materially in second-half of 2021, it is time to start buying again, Chatterjee said.
JPMorgan expects the upcoming catalysts to drive a share price rally supported by slightly better earnings outlook and earnings multiple.
AAPL Price Action: At last check, Apple shares were rising 1.37% to $141.88.
Photo: courtesy of Apple.
Related Link: Here's Why Apple's Sales Jumped In India In Q1
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