- Apple is set to surge 40% on a “once in a decade” opportunity over the next year as it benefits from a massive upgrade cycle for its iPhone install base, according to Wedbush.
- In a note published on Wednesday, Wedbush raised its Apple price target to $600, and raised its bull-case price target to $700, representing upside potential from current levels of 20% and 40%, respectively.
- According to Wedbush, the soon-to-be-released iPhone 12 will represent the most significant product cycle for Apple since the iPhone 6 was released in 2014.
- The street is underestimating the “massive pent-up demand” of the upcoming iPhone 12, which will help fuel Apple’s continued re-rating to a higher valuation.
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Apple is set to continue its monster run, and could rally another 40% in a bull-case scenario to $700, according to a Wednesday note from Wedbush.
The iPhone maker is set to capitalize on a “once in a decade” opportunity – it’s on the verge of a massive upgrade cycle for its 950 million iPhone install base as it prepares the launch of the iPhone 12 later this year, according to Wedbush.
The pent-up demand for a new iPhone with 5G capabilities and a new design form will make the iPhone 12 the most significant product cycle for Apple since the iPhone 6 was launched in 2014, Wedbush said.
Wedbush estimates that 350 million iPhone users will be looking to upgrade their current iPhone over the next 12 to 18 months.
Wedbush also raised its base-case price target to a Street high $600, representing 20% upside potential from Tuesday's close.
"We still believe many on the Street are underestimating the massive pent-up demand around this supercycle for Apple," Wedbush said, adding that 2021 represents a big opportunity for Apple as its monetization engine kicks into a higher gear.
Apple announced a services bundle subscription earlier this month, as it looks to better monetize its subscription services like Apple TV, Apple Music, Arcade, and more.
Wedbush assigned a $900 billion to $950 billion valuation for Apple's services business, arguing that the company continues to "flawlessly execute on the vision." For 2021, Wedbush estimates the business will hit $60 billion in annual revenues, which "speaks to Apple's ability to further monetize its golden installed base," the note said.
Finally, China remains a "key ingredient" for Apple's success as Wedbush estimates approximately 20% of iPhone upgrades will be coming from the region over the next year. And despite the noise surrounding a possible WeChat ban by the Trump administration, Wedbush says Apple's iPhone ecosystem will not be negatively impacted.
Apple jumped as much as 1.5% to $507.39 in Wednesday trades. Shares of Apple are up 71% year-to-date.
