Canaccord raises Apple price target to $145, estimates iPhone captured 93% of smartphone profits

Posted:
in iPhone edited February 2015
Apple's domination in the smartphone market compelled Canaccord Genuity to raise its price target on Apple stock to $145 on Monday, advising investors to buy in on the continued strength of the new iPhone 6, which decimated profits for competitors last quarter.

iPhones 2014


Analyst Michael Walkley of Canaccord issued a note to investors on Monday, a copy of which was provided to AppleInsider, in which he said the growing iPhone user base should help drive steady long-term sales for the company.
Apple is estimated to have dominated with 93 percent of industry profits last quarter, led by strong sales of the iPhone 6 and iPhone 6 Plus.
In particular, surveys conducted by Canaccord suggest that the larger displays of the iPhone 6 and iPhone 6 Plus have attracted more Android smartphone users than the iPhone 5 and iPhone 5s before them.

A larger iPhone installed base bodes well for future sales, Walkley said, as Apple has a history of retaining customers and selling upgrades. Walkley estimates that there is currently an iPhone installed base of 404 million people, of which he believes only 15 percent have upgraded to the latest-generation iPhone 6 lineup.

Beyond unit sales, Apple is also dominating the smartphone industry in profits, Walkley said. His estimates show Apple having captured 93 percent of industry profits in the December quarter --?an accomplishment he called "remarkable."

Apple sold so many smartphones last quarter --?74.5 million iPhones in a record smashing holiday -- that it edged past rival Samsung in terms of unit sales. But as noted by Walkley, Apple achieved this with an average selling price of $698 per handset, compared to just $206 per Samsung phone.

With Apple estimated to have taken 93 percent of industry profits, Samsung's share was at just 9 percent. The two companies once again combined for more than 100 percent profit share as all other competitors either broke even or lost money.

Canaccord's new $145 price target is an increase from its previous projection of $135. The investment firm has maintained its "buy" rating on shares of AAPL.
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Comments

  • Reply 1 of 37
    "As you can see, we currently control 93% of profits. The other 9% is currently controlled by our competitors, who we are in the process of eliminating."

    Or something like that. :)
  • Reply 2 of 37
    iqatedoiqatedo Posts: 1,717member

    Hang on... these guys aren't analysts are they? Something wrong with this picture!

  • Reply 3 of 37
    iqatedoiqatedo Posts: 1,717member

    Apple had better let someone start competing or there could be trouble. :\

  • Reply 4 of 37
    croprcropr Posts: 1,046member
    These is ridiclous way of counting.

    If you want to know the market share of profits, you only take the ones that make profits into account.

    And because Samsung, LG, Lenovo and Huawei all reported profits and have together much more than 7 %, the 93% is just bulls..t
  • Reply 5 of 37
    MacProMacPro Posts: 19,310member
    That would take us over the $1,000 per share pre split if my fuzzy math is correct. Nice :)
  • Reply 7 of 37
    calicali Posts: 3,494member
    I wanna see a quarter where no android manufacturer makes a profit.
  • Reply 8 of 37
    netmagenetmage Posts: 314member
    cropr wrote: »
    These is ridiclous way of counting.

    If you want to know the market share of profits, you only take the ones that make profits into account.

    And because Samsung, LG, Lenovo and Huawei all reported profits and have together much more than 7 %, the 93% is just bulls..t

    If you count only the profitable companies Apple drops to 91% - is that better?

    You do know this is about profits in the smartphone sector and not the other things these companies make, right?
  • Reply 9 of 37
    Quote:
    Originally Posted by IQatEdo View Post

     

    Apple had better let someone start competing or there could be trouble. :\


     

    They have plenty of competition, and Android sells way more phones. The Justice Department doesn't care if Android isn't actually making money, because that's on them and their selling strategy. Apple is targeting their product at the high end, much like a luxury car vs an economy car, and so makes more profit per unit.

     

    Following the car example, BMW made USD$2.9 billion pre-tax profit in the first quarter last year, while Ford made USD$1.4 billion pre-tax profit in the same period. Ford sells a lot more cars than BMW does, but BMW's cars are better and sold at a steeper margin. There is no lack of competition for BMW, they simply have a better business strategy and wouldn't be in any danger of Justice Department investigation.

  • Reply 10 of 37
    Quote:

    Originally Posted by Fuzzypaws View Post

     

     

    but BMW's cars are better

    That's actually debatable these days. BMW's quality in materials and durability has taken a nosedive, the faithful are pretty upset with them.

  • Reply 11 of 37
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     

    That's actually debatable these days. BMW's quality in materials and durability has taken a nosedive, the faithful are pretty upset with them.


     

    Did not know that actually! Good to know. I was simply judging based on past reputation and reviews... which is probably what they're counting on, actually.

     

    Still, the salient point remains; the fact that one company makes much more profit per unit than their competitor doesn't mean there is a lack of competition or a need for Justice Department involvement.

  • Reply 12 of 37
    jungmarkjungmark Posts: 6,814member
    102 is the new 103.

    Sweet money! How long until the Android manufacturers give up and demand $$$ from Google.
  • Reply 13 of 37
    jungmarkjungmark Posts: 6,814member
    iqatedo wrote: »
    Apple had better let someone start competing or there could be trouble. :\

    Nope. It's not Apple's fault no one can compete. It isn't preventing competition like Microsoft. Nor is it using predatory pricing a la Amazon.
  • Reply 14 of 37
    Quote:

    Originally Posted by Fuzzypaws View Post

     

     

    Did not know that actually! Good to know. I was simply judging based on past reputation and reviews... which is probably what they're counting on, actually.

     

    Still, the salient point remains; the fact that one company makes much more profit per unit than their competitor doesn't mean there is a lack of competition or a need for Justice Department involvement.




    I didn't know it until recently either, but saw the complaints come up in an article on the Focus RS. This was Europeans complaining as well.

  • Reply 15 of 37
    Quote:

    Originally Posted by sog35 View Post

     

     

    still way better than Honda/Toyota

     

    plus their engines are way better




    Brands in most cases have been slipping, though I think Toyota's finally gotten back on the wagon.

     

    Basically, if a brand is going for marketshare, you can expect quality to drop. We saw it with GM, with Toyota, we're seeing it with VAG, and BMW is going for marketshare too.

     

    Good news with Apple is that they're organically increasing marketshare. Warranty costs for the iPhones 6 are proving to be lower than previous models, meaning QC has actually improved despite the breakneck pace of assembly.

  • Reply 16 of 37
    calicali Posts: 3,494member
    Now that Apple dominated Xiaomi in China,

    What's the next iPhone killer?
  • Reply 17 of 37

    Pertinent sayings for Apple:

     

    Beyond every great rise, there is a greater fall.

    What goes up, must come down.

    The quiet calm before the storm.

    After the feast comes the famine.

    Once a one-trick pony loses his trick, it's time for the glue factory.

    Outside every silver lining is a storm cloud.

    Even the greatest forces in the universe evolve into chaos.

    The faster you dance on ice, the faster you'll break your ass.

     

    So, my fellow shareholders, this is no time to rejoice.  The past quarter has long ago ended and the next quarter will only bring more doom and gloom.  After this is Apple we're talking about and we're always fighting for survival.  Wall Street has it's eyes on Tim Cook and they don't like what they're seeing.  Apple's 52 week share gains are simply too much for Wall Street to feel comfortable with and it's time for a manipulated take-down.

     

    /s

  • Reply 18 of 37
    Quote:

    Originally Posted by cali View Post



    I wanna see a quarter where no android manufacturer makes a profit.



    I second that but only because I want to see what Wall Street has to say about it.  They're going to have to become very imaginative to continue finding fault with Apple's smartphone business.  I'm sure they'll just fall back on the false theory of how major market share always wins in the end.

  • Reply 19 of 37
    lkrupplkrupp Posts: 9,137member
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     

    That's actually debatable these days. BMW's quality in materials and durability has taken a nosedive, the faithful are pretty upset with them.




    Well, some of the faithful say that about Apple too, but those 74.5 million iPhones say otherwise. They’re wrong just like the BMW faithful are wrong and I can prove it just as well as those who say otherwise. If you read it on the Internet that doesn’t make it true. Google search “hits” don’t count either. We now live in a virtual universe where rumor, innuendo, and conspiracy can be massaged into reality simply by putting it on the Internet. 

  • Reply 20 of 37
    alfiejralfiejr Posts: 1,524member
    Quote:

    Originally Posted by cali View Post



    Now that Apple dominated Xiaomi in China,



    What's the next iPhone killer?



    oh they'll find one ...

     

    but in fact the only killers are the iPhone 6's - true Droid Killers.

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