Why iPhone 12 Will Be Another 'Defining Chapter' In Apple's Growth Story

The sell-side is unanimously optimistic about the prospects for the newest iteration of Apple Inc.'s AAPL iPhone, which is expected to be launched in October.

The Apple Analyst: Wedbush analyst Daniel Ives maintained an Outperform rating on Apple and increased the price target from $475 to a Street-high $515, with the bull-case price target at $600.

The Apple Thesis: There has been a discernible uptick in iPhone 12 forecasts, which bodes well for demand, Ives said, citing Wedbush's new Asia supply chain checks.

Cuperinto will likely launch only 5G models this fall, with a next-gen 4G model at a lower price point likely rolling out in early 2021. There will be U.S. and non-U.S. versions of 5G phones, with the former incorporating mmWave technology. Ives said this is a clear positive heading into the launch, he added.

Apple now has a "once in a decade" opportunity over the next 12 to 18 months, given 350 million of the 950 million iPhones worldwide are in the window of an upgrade opportunity, Ives said. About 20% of iPhone upgrades, according to the analyst, will come from China.

"Taking a step back we believe iPhone 12 represents the most significant product cycle for Cook & Co. since iPhone 6 in 2014 and will be another defining chapter in the Apple growth story looking ahead despite a softer consumer spending environment in our opinion," he wrote in the note.

The Street is understanding the massive pent-up demand around the iPhone 12 supercycle.

Wedbush sees the services business as a $60 billion+ annual revenue stream, underlining Apple's ability to further monetize its golden installed base. Wearables are also seeing strong growth, with Airpods sales likely to increase from 65 million in 2019 to 90 million in 2020, catalyzed by the release of a new version ahead of the holiday season.

AAPL Price Action: Apple shares were rising 1.5% to $451.20 at the time of publiction.

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