Shares of Apple don't reflect significance of iPhone Upgrade Program, Piper Jaffray says
Apple's newly launched iPhone Upgrade Program will drive handset owners to upgrade their devices even faster than before, adding to the company's bottom line over the next four-plus years and pushing its stock higher, investment firm Piper Jaffray believes.
Though investors are aware of the iPhone Upgrade Program and its benefits to Apple, the potential for it is not yet priced into shares of AAPL, analyst Gene Munster said in a note to investors on Thursday, a copy of which was provided to AppleInsider.
Specifically, Munster estimates that the current upgrade cycle for an iPhone user in the U.S. is about 22 months, but he sees that shortening to an average of about 15 months by calendar year 2018. He believes the new upgrade program could push iPhone sales higher by 5 to 7 percent per year for each of the next four years and beyond.
Munster's estimates assume that about 10 percent of iPhone customers are currently annual upgraders, but he sees that number swelling to as many as 75 percent of iPhone owners by the end of 2018.
"We do not feel shares of AAPL reflect the significance of this trend," he said.
The effects of Apple's plan are already being seen, as Munster believes the move prompted U.S. carrier Verizon to begin offering an annual upgrade option. And he believes that it will have an even greater impact on Apple's revenue once the iPhone Upgrade Program begins to roll out internationally.
Another long-term benefit of the program, in Munster's view, is offering more year-old, refurbished handsets available to purchase. Given that the iPhone has extremely high user retention rates, he believes selling more affordable refurbished handsets will rope more customers into the Apple ecosystem.
Piper Jaffray remains one of the most bullish firms covering AAPL stock, with an "overweight" rating and a price target of $172.
Though investors are aware of the iPhone Upgrade Program and its benefits to Apple, the potential for it is not yet priced into shares of AAPL, analyst Gene Munster said in a note to investors on Thursday, a copy of which was provided to AppleInsider.
Specifically, Munster estimates that the current upgrade cycle for an iPhone user in the U.S. is about 22 months, but he sees that shortening to an average of about 15 months by calendar year 2018. He believes the new upgrade program could push iPhone sales higher by 5 to 7 percent per year for each of the next four years and beyond.
Munster's estimates assume that about 10 percent of iPhone customers are currently annual upgraders, but he sees that number swelling to as many as 75 percent of iPhone owners by the end of 2018.
"We do not feel shares of AAPL reflect the significance of this trend," he said.
The effects of Apple's plan are already being seen, as Munster believes the move prompted U.S. carrier Verizon to begin offering an annual upgrade option. And he believes that it will have an even greater impact on Apple's revenue once the iPhone Upgrade Program begins to roll out internationally.
Another long-term benefit of the program, in Munster's view, is offering more year-old, refurbished handsets available to purchase. Given that the iPhone has extremely high user retention rates, he believes selling more affordable refurbished handsets will rope more customers into the Apple ecosystem.
Piper Jaffray remains one of the most bullish firms covering AAPL stock, with an "overweight" rating and a price target of $172.
Comments
Hey, it worked for me. I was going to wait. But the AUP inspired me to reserve for day 1. Unlocked, annual upgrades, Applecare? A no brainer IMO.
So they could sell just as many as they can make Right now while generating less revenue and profit? How does that help the stock value?
Nobody cares.
After the outrageous unjustified butchering of 2012-13, and now this; I won't be back. It's not worth it.
All you get is the opportunity to see that, for the most profitable company on earth, the stock isn't worth a shit if Wall Street deems it so.
It's only worth what the machine will pay.
Originally Posted by sog35
Nor does Cook give hints that they would be willing to take the company public.
Take the company public seems like an error. Taking the company private is virtually impossible. What investment groups could really raise hundreds of billions of dollars to pull it off and what would be the point? You would have fewer liquidity options at that point, and now its owners would have far more clout.
Says the king of made up numbers.
Or Apple could make the iPhone more affordable, for example only two times the manufacturing cost (instead of three times), but I guess the shareholder won't let them do that.
Get off the “cheaper” bandwagon will you. It doesn’t work, it doesn’t fix things. All it does is sell more phones for less money and is a zero sum game as far as profit is concerned. A cheaper iPhone means you have sell tons more of them just to stay where you are. What part of this does the cheap crowd not understand?
Technically there is way for Apple to go private and still have thousands of shareholders.
The SEC rule is that a private company can only have up to 2,000 shareholders of record. But most public companies don't record shareholders by individual. For example all individual shareholders who own shares in a Scottrade account are counted as ONE SHAREHOLDER of record. Scottrade is counted as one shareholder of record even though it may have thousands of individual shareholders. So how many investment houses are there? Scottrade, TD, BOA, Merily Lynch, ect. Probably less than 2,000. And if it was more than 2,000 it would be no big deal to combine those on the record.
Second Apple could go private and remove their stock from public trading even if they have MORE than 2,000 shareholders. They would still need to file quarterly financials with the SEC but they could remove the stock from trading on the NYSE.
So technically Apple could go private even with tens of thousands of shareholders.
Next is funding. Who has $400 billion to buy Apple? The shareholders do. They could simply convert their public shares to private shares held in a trust. This is no big deal. Today you can already buy private equity shares from a brokerage through a fund. And those who want to sell can at a 40-50% premium. IMO, very few would sell and Apple could easily get the $100 billion to buy out the few who want to sell.
This has got to be the worst idea I have seen here. All you are doing is removing liquidity and it would not really be legal to have more then 2000 shareholders via using brokers to be subowners. All you plan would do is remove the obvious market price.
If you want to sell your shares for more then the market things they are worth you can do that now anyhow. Just put in a sell order at a fixed price. Of course it will just sit there until that price is reached.
Just let the AAPL profits keep rolling in. If the cash per share does not move Wallstreet, BUYBACKS are far better then dividends for moving the price up long term.
Or Apple could make the iPhone more affordable, for example only two times the manufacturing cost (instead of three times), but I guess the shareholder won't let them do that.
They offer a full range of "affordable" iPhones right now.
It's a gamblers market.
But how exactly is Wall Street manipulating the stock. Not disputing as such. Just intrigued to know what it is they do as I've heard so much about apple being manipulated but not aware of how physically this happens ? How is no one at Wall Street found accountable. Surely investigations are done
It has to do with the 'real' (or fair) value of something, no one likes a ripoff.
In the long run this will harm Apple, because they make way to much profit.
If you buy a 'Tesla' for example you know it isn't a ripoff and this will benefit the brand enormously.
This isn't the only reason it's a gambler market, people try to manipulate it all the time by creating fake news stories about Apple and it's suppliers.
This alone makes it totally unpredictable.
How are Apple actually being manipulated though. Not disputing it just unclear as to how Wall Street supposedly does this. Who is behind it what do they do and how is this manipulation not discovered and addressed. Surely it wouldn't be allowed as its corruption ?
Sign me up for two.
Apple stock is a winner over time. You have to hold the stock for 5 years minimum. It's a great long term investment that pays dividends.
Many holders of Apple stock sell call options contracts.
Sell calls, buy puts, start false rumors of doom, rinse and repeat.