UBS sees 'iPhone 5C' becoming big in China, boosts AAPL target to $560
Investment firm UBS sees shares of Apple rising more than 10 percent in the near future based on the potential for a lower-cost iPhone to make a big splash in the Chinese smartphone market.
UBS analysts Steven Milunovich and Peter Christiansen released a new report on Wednesday, raising their price target for AAPL from $500 to $560 with an estimated $44.65 in earnings per share for fiscal 2014. That earnings estimate is up from the previous guess of $42.29. The analysts expect that FY2015 will see Apple pulling in $48.45 per share.
Apple's anticipated lower-cost "iPhone 5C" is the primary cause for UBS's increased optimism regarding the Cupertino company's prospects. Specifically, the analysts expect the lower-end iPhone to have a considerable impact in China:
"Based on income," the report reads, "we estimate the iPhone opportunity in China is at least one-third the total 3G subscriber base or over 100 [million] users."
The UBS report predicts that Apple's ongoing negotiations with China Mobile will come to a mutually beneficial end. Further, it sees Apple selling 17 million iPhones through that carrier ? the nation's largest ? alone, of which 70 percent would be the "iPhone 5C," while 30 percent would be the higher-end "iPhone 5S" or the iPhone 5.
China Mobile is the largest carrier in the world, with nearly 700 million total subscribers. Despite its size, though, China Mobile still does not carry Apple's bestselling handset, a fact that has allowed some of its competitors to reap the financial benefits of offering what it cannot.
The "iPhone 5C" could have a unit cost of $399 according to UBS, up from its previous estimate of $379. The firm's estimate also has a lower bill of materials than previous guesses, and UBS now predicts that Apple's average gross margin on the device will be about 38 percent.
UBS analysts Steven Milunovich and Peter Christiansen released a new report on Wednesday, raising their price target for AAPL from $500 to $560 with an estimated $44.65 in earnings per share for fiscal 2014. That earnings estimate is up from the previous guess of $42.29. The analysts expect that FY2015 will see Apple pulling in $48.45 per share.
Apple's anticipated lower-cost "iPhone 5C" is the primary cause for UBS's increased optimism regarding the Cupertino company's prospects. Specifically, the analysts expect the lower-end iPhone to have a considerable impact in China:
"Based on income," the report reads, "we estimate the iPhone opportunity in China is at least one-third the total 3G subscriber base or over 100 [million] users."
The UBS report predicts that Apple's ongoing negotiations with China Mobile will come to a mutually beneficial end. Further, it sees Apple selling 17 million iPhones through that carrier ? the nation's largest ? alone, of which 70 percent would be the "iPhone 5C," while 30 percent would be the higher-end "iPhone 5S" or the iPhone 5.
China Mobile is the largest carrier in the world, with nearly 700 million total subscribers. Despite its size, though, China Mobile still does not carry Apple's bestselling handset, a fact that has allowed some of its competitors to reap the financial benefits of offering what it cannot.
The "iPhone 5C" could have a unit cost of $399 according to UBS, up from its previous estimate of $379. The firm's estimate also has a lower bill of materials than previous guesses, and UBS now predicts that Apple's average gross margin on the device will be about 38 percent.
Comments
Yes, the 5c changes the game. China Mobile will want it and be more willing to negotiate a deal now. But $560?...come on.
Who pays attention to these folks!?
Quote:
Originally Posted by quinney
Wonder if their EPS guesses take into consideration a lower share count.
Don't think so much, AAPL is flying above 600 on the first report of 2014 in Jan. Well if few more Icahn's or big news come in before that, then you never know how quickly it can reach there
560 is a very conservative target for now!