Apple Gets New Street-High Price Target: 'Top Pick Into 2022'

Apple, Inc. AAPL is on the cusp of topping a $3 trillion market capitalization, potentially becoming the first company to do so. Monday, the company's shares received a Wall Street-high price target from an analyst at JPMorgan Securities.

The Apple Analyst: Samik Chatterjee reiterated an Overweight rating on Apple stock and named it the firm's top pick into 2022. The analyst increased the price target from $180 to $210.

The Apple Thesis: Expectations around the iPhone 13 demand cycle have improved from the "low-bar" set earlier in 2021, helping the stock to reverse the underperformance of the first half of the year, Chatterjee said in a note.

Most of the revenue and earnings upside realization associated with the iPhone 13 cycle is yet to come, the analyst said. This will lead to investors attributing a peak multiple on consensus earnings expectations, similar to the iPhone 12 cycle, he added.

Related Link: Why Apple's 'AR/VR Opportunity' Gets This Analyst Excited About Cupertino's Growth Prospects

Moreover, there are likely to be further upgrades to consensus iPhone shipments, given the expected launch of the 5G-enabled iPhone SE model, the analyst said. The model, according to the analyst, has the potential to drive upgrades from the installed base of old iPhone, an estimated 300 million iPhones, as well as switchers from an installed base of low- to mid-end Android phone.

"We believe the focus on the iPhone 13 demand and supply situation is driving investors to underappreciate the relevance of the 5G iPhone SE to the FY22 product cycle," Chatterjee said.

The analyst estimates 5G SE to further boost the 2022 iPhone product cycle to a new record level, in combination with resilient iPhone 13 demand.

As such, JPMorgan raised its 2022 iPhone unit shipments forecast to 250 million units, up 10 million from the estimated number for fiscal-year 2021. The optimism is premised on expectations for a stronger product cycle in fiscal-year 2022.

The firm also raised its EPS estimates for 2022 and beyond, driven by iPhone estimates. The main driver to the upward price target adjustment was due to the premium target multiple, in line with peak multiples from the previous product cycle, it added.

AAPL Price Action: At last check, Apple shares were down 0.69% at $178.22.

Related Link: Why Apple's 'AR/VR Opportunity' Gets This Analyst Excited About Cupertino's Growth Prospects