Apple Gets An Upgrade Thanks To China, Holidays, And More

Analysts at Rosenblatt Securities have turned more bullish on Apple Inc. AAPL. The firm's Jun Zhang upgraded Apple's stock from Neutral to Buy with a price target boosted from $150 to $180.

There were three main reasons for the upgrade.

China

Apple is seeing momentum in China, including strong sales in Macbook and iPad, Zhang said in a note. The momentum appears to be sustainable and Apple could even adopt 3D sensing technologies in the iPad Pro and PCs which will create new demand for its products. In addition, artificial reality and virtual reality functionality in the iPhone will give the company "at least a one year advantage" over rival Android devices.

Holiday Guidance

Apple's fiscal first-quarter (calendar fourth-quarter 2017) guidance signals to investors that Apple will be ramping its iPhone 8 and iPhone 8 Plus shipments for the key holiday season, the analyst said. At the same time, the company appears to be "more comfortable" with the ongoing iPhone X ramp.

Bigger Screen

Apple could also be looking to upgrade the screen size for its iPhone 8S/Plus models, which would make the smartphones even more competitive in the full screen trend that is dominating the Android market.

The analyst's research suggests that NAND and DRAM prices will stabilize in Apple's calendar March quarter. This would give the company "some bargaining power" over input prices, which would in turn help boost overall gross margins.

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