Goldman Sachs raises Apple target to $150 in anticipation of blockbuster 'iPhone 8'

Posted:
in AAPL Investors
Goldman Sachs is "increasingly confident" in Apple's upcoming fall refresh of the iPhone, as the firm on Monday cited potential use of OLED and augmented reality in raising its price target for the company to $150.




Maintaining a "Buy" rating on Apple stock, Goldman Sachs analyst Simona Jankowski advised in a note received by StreetInsider that high confidence in the "iPhone 8" product in the second half of the year is boosting both forecasts and the target price. The new target of $150 is up $17 from the previous target of $133, a figure Apple beat Monday morning by opening at $133.08 per share.

Goldman Sachs has increased its iPhone shipment forecast to 230 million units for the 2017 calendar year, up from a previous prediction of from 227.3 million. Looking forward to 2018, Jankowski expects iPhone shipments to reach 235.9 million, up from her previous forecast of 231.5 million.

Anticipated accelerated earnings growth for the next two years has also led to a change for the target multiple from 14 times to 16 times, with Jankowski claiming this is "to better capture that inflection."

Jankowski believes rumors about the inclusion of augmented reality technology in the upcoming iPhone refresh are "increasingly likely," with the use of 3D sensing technology able to "enable a robust augmented reality feature set that we believe will be a key differentiator for the 10-year anniversary iPhone."
Goldman Sachs analyst Simona Jankowski believes rumors about the inclusion of augmented reality technology in the upcoming iPhone refresh are "increasingly likely."
Apple has reportedly worked on augmented reality for a while, with ongoing rumors of an AR headset produced in collaboration with Zeiss, as well as AR-related patents. Apple CEO Tim Cook has also spoken out about AR, showing an interest of it being used as a "core technology" that could have a wide variety of real-world uses.

The 3D-sensing abilities that could appear in the next iPhone are considered by Jankowski as "a significant step-up in innovation" compared to the previous two iPhone cycles, "especially when viewed in conjunction with the potential significant form factor change enabled by the move to an OLED display."

OLED is also the subject of iPhone rumors over the last few years, replacing the LCD display to lower power consumption and increase flexibility, among other benefits. A recent report claims Apple is preparing to move over to the display technology, with a $4.3 billion contract with Samsung providing Apple with 60 million 5-inch OLED panels.

Jankowski also cites "supply-chain checks" that suggest a third 5.8-inch iPhone model will be offered to consumers, with a price anticipated to be above the $649 and $769 starting prices of the 4.7-inch iPhone 7 and 5.5-inch iPhone 7 Plus. This also ties into other reports claiming there to be a new high-end iPhone that will cost at least $1,000.

Comments

  • Reply 1 of 9
    Pump and dump baby!
    watto_cobra
  • Reply 2 of 9
    Hum, missed the Apple at an all-time high story. That use to be a given for AppleInsider.
  • Reply 3 of 9
    MacProMacPro Posts: 17,835member
    sog35 said:
    Pump and dump baby!
    Nah. this is EASILY see $150 this year.

    The question is if it hits its fair value of $170

    If you are not willing to hold the stock for another 5 years, I'd recommend to sell the stock at $150. Cause you know these Wall Street aholes will tank the stock if they can.

    Once this hits $150 this year, personally I'll dump almost all my Apple stock for a very nice gain. I might buy Apple again latter if Wall Street drops it 40% below its fair value in the future.
    I'd agree $170 is when AAPL actually starts to be priced in the correct ballpark, note I said 'starts'.
    watto_cobra
  • Reply 4 of 9
    MacProMacPro Posts: 17,835member
    sog35 said:
    MacPro said:
    sog35 said:
    Pump and dump baby!
    Nah. this is EASILY see $150 this year.

    The question is if it hits its fair value of $170

    If you are not willing to hold the stock for another 5 years, I'd recommend to sell the stock at $150. Cause you know these Wall Street aholes will tank the stock if they can.

    Once this hits $150 this year, personally I'll dump almost all my Apple stock for a very nice gain. I might buy Apple again latter if Wall Street drops it 40% below its fair value in the future.
    I'd agree $170 is when AAPL actually starts to be priced in the correct ballpark, note I said 'starts'.
    But when has AAPL actually been valued correctly? very rare.

    I'd say in 2012 when it was $700 a share. That's about it.

    I don't trust the market to fairly value Apple so I'm selling at $150 even though I know based on discounted future cash flows its worth $170-$200
    I hear what you say.  I've taken profits recently but I will probably go back in and go for the ride to $200 :)
  • Reply 5 of 9
    brucemcbrucemc Posts: 1,488member
    While a positive assessment of Apple's stock potential is nice, the analyst continues to view Apple through the lens of purely a h/w maker, that will introduce a new widget for sale.  Once said widget has sold, then it is back to square one and what to anticipate for next widget.

    Apple hasn't been that company really ever, and certainly not since the return of Steve Jobs in 1997. Starting at least 10 years ago it could be seen that Apple is able to grow an increasing user base with increasing h/w and services sales.  As Horace Dediu has said, "Apple is in the customer creation business".  The iPhone is the product which grows that base the most, but if management is to be believed (and it is illegal for them to lie in public statements), then a very solid portion of each new product version goes to newcomers (wasn't last quarters Mac sales a large portion to new & switchers)?  New to Mac, new to iPhone, new to iPad.  Every quarter the base is growing still.  The products just last a long time, and so upgrade cycles continue to lengthen across the board (my iMac is 8 years old, and my MBP is 6, but I am going to get new ones in the coming few years).

    Any analyst worth a dime should be focusing on these aspects (positive or negative, upside and risks) - not whether iPhone 8/X is going to be the iPhone that provides a larger than expected bump in sales.  Any "super cycle" of this year (if it happens) will only make next year look a little weaker, but that is completely missing the point of the companies future prospects by growing that base which increasingly spends money with Apple across the board.  Isn't that why Facebook and Alphabet and all of the "unicorns" are highly valued - based on the potential of the future.
    patchythepirate
  • Reply 6 of 9
    radarthekatradarthekat Posts: 2,898moderator
    sog35 said:
    Pump and dump baby!
    Nah. this is EASILY see $150 this year.

    The question is if it hits its fair value of $170

    If you are not willing to hold the stock for another 5 years, I'd recommend to sell the stock at $150. Cause you know these Wall Street aholes will tank the stock if they can.

    Once this hits $150 this year, personally I'll dump almost all my Apple stock for a very nice gain. I might buy Apple again latter if Wall Street drops it 40% below its fair value in the future.

    Why dump the shares?  Just sell at-the-money covered calls a year out.  You'll retain the shares (delaying the day you pay taxes), get the dividend payments, and get a chunk of option income to offset any drop in the share price. And that's option income you can invest elsewhere right away and for that entire year make gains on it.  All without incurring a single dime in tax burden for the current tax year (the tax year in which you make that move).
    edited February 2017
  • Reply 7 of 9
    Pump and dump baby!
    More like anticipation and doom: the Apple forecast cycle.
  • Reply 8 of 9
    Pump and dump baby!
    More like anticipation and doom: the Apple forecast cycle.
    It's your choice to always see half empty glass. I myself always think that the glass can always be re-fill, regardless of views.
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