Credit Suisse predicts Apple stock 'super cycle' on strength of all-glass 2017 iPhone

Posted:
in AAPL Investors edited June 2016
Analysts on Wall Street are increasingly expecting an incremental iPhone hardware update this year, which has led some to turn their sights to a rumored 2017 handset revamp in hopes of pushing Apple stock to new heights.


Edge-to-edge iPhone display concept by Martin Hajek.


Credit Suisse told investors this week that it expects Apple to see a "muted" upgrade cycle for the anticipated "iPhone 7," widely expected to launch in September. Instead, analyst Kulbinder Garcha has set his sights on the 2017 iPhone, which is rumored to have a major redesign coinciding with the product's 10-year anniversary.

Though Garcha maintained a $150 price target and "outperform" rating for shares of AAPL, he did cut his calendar year 2016 estimate to $7.80, and revised his calendar year 2017 EPS estimate downward by 5 percent to $9.67.

But a major redesign for the iPhone in 2017 has Garcha eyeing EPS of $12.32 in 2018. The new predictions were issued in a research note which was provided to AppleInsider.

Credit Suisse believes that this year's so-called "iPhone 7" will be a modest upgrade. Significant innovations are expected to be pushed out to the 2017 iPhone, which Garcha predicted will break convention and be named an "iPhone 8," rather than a "7s."


Edge-to-edge iPhone display concept by Martin Hajek.


Rumors have suggested the 2017 iPhone will feature a curved glass case housing a 5.8-inch AMOLED display. It's also been said that Apple could embed many feature -- including the Touch ID sensor, FaceTime camera, and speaker -- into the display itself.

With major changes said to be in the works, Garcha believes the 2017 iPhone could result in Apple not only courting new users, but also cause an acceleration of upgrades for existing iPhone customers. As a result, Credit Suisse believes Apple will be in a position to increase its share of the smartphone market.

"We see a number of features and upgrades, including an OLED [organic light-emitting diode] screen, full glass display, no home button, enhanced Taptic Engine, improved camera, and wireless charging in the iPhone 8," Garcha wrote. "While this is some time away, we believe the iPhone 8 will be feature and specification rich. These features, coming potentially in September 2017 and even if in just a Pro version of the device, should drive an accelerated replacement cycle and draw in new users and should result in mix improvements."

As a result, Credit Suisse forecasts project Apple taking 39 percent of the general smartphone market, with sales of 250 million units in 2018. If the predictions prove true, that would be a 16.1 percent increase over the previous year.

Based on these factors and "solid risk reward arguments," Credit Suisse continues to call for a 12-month Apple valuation of $150 per share. As of Thursday, Apple stock was trading at just above $97, down considerably from a 52-week high of $132.97.

Comments

  • Reply 1 of 11
    bobschlobbobschlob Posts: 1,074member
    2017 is still a long ways out there.   :|
  • Reply 2 of 11
    That Martin Hajek guy sure does some quality renderings. Some pretty good ideas too.
  • Reply 3 of 11
    rogifan_newrogifan_new Posts: 3,823member
    Another way to create a "tough compare" so Wall Street can short the stock.
  • Reply 4 of 11
    rogifan_newrogifan_new Posts: 3,823member
    That Martin Hajek guy sure does some quality renderings. Some pretty good ideas too.
    Easy to do when you don't have to engineer anything.
    nolamacguy
  • Reply 5 of 11
    That Martin Hajek guy sure does some quality renderings. Some pretty good ideas too.
    Easy to do when you don't have to engineer anything.
    Perhaps so, but he does appear to give some thought about what technologies might enable some of his designs. Did you look at his iPhone 7 concept page linked above? He cites some Sharp technology for the LCD. The exploded views look good too.

    Some of the ideas expressed may not be great, but most of them at least seem do-able. Don't be such a Debbie Downer.
  • Reply 6 of 11
    Easy to do when you don't have to engineer anything.
    Perhaps so, but he does appear to give some thought about what technologies might enable some of his designs. Did you look at his iPhone 7 concept page linked above? He cites some Sharp technology for the LCD. The exploded views look good too.

    Some of the ideas expressed may not be great, but most of them at least seem do-able. Don't be such a Debbie Downer.
    Is this your first time reading his posts? That was upbeat!
    roundaboutnowfastasleep
  • Reply 7 of 11
    nolamacguynolamacguy Posts: 4,758member
    That Martin Hajek guy sure does some quality renderings. Some pretty good ideas too.
    ideas are the easy part. anybody and everybody comes up with cool ideas. the hard part is implementing them. 
    patchythepirate
  • Reply 8 of 11
    misamisa Posts: 827member
    The patents actually suggest a wrap-around screen http://thenextweb.com/insider/2016/06/14/apple-patent-shows-company-might-toying-wrap-around-iphone-screen/#gref
    However I'm not sure I like this idea very much.

    A curved screen reduces utilitarian use of the device, and makes it that much less durable. Only doable with AMOLED's which Apple has pooh-poohed already, with most of the rumors suggesting we won't see it till maybe 2019. AMOLED's are not very durable either. Samsung's "edge" phones don't seem to outselling their conventional phones so this seems like the wrong path to even be staring down.

    Curved screens, especially convex curved screens, are substantially less useful because instead of being able to have apps presume a flat screen, now you need to crop the output so it doesn't go to the edge since the edge isn't going to be visible from all angles, and it makes watching video or reading text absolutely ridiculous.

    Still it's not the worst thing. The worst thing would be removing the headphone jack without having two lighting ports. Having to share the charging with the headphone jack would make the iphone much less useful. In fact most people would rather the phones be thicker just so that the battery lasts all day. If Apple removes the headphone jack just to make it water-proof and that becomes a selling point, maybe I'll forgive it, but that's the only situation where I would.




    waverboy
  • Reply 9 of 11
    That Martin Hajek guy sure does some quality renderings. Some pretty good ideas too.
    ideas are the easy part. anybody and everybody comes up with cool ideas. the hard part is implementing them. 
    1. Yes, of course, it's all easier said than done.
    2. I agree, a lot of people come up with cool ideas, but I would not go so far as to say "anybody and everybody."
    3. My primary comment was about the quality of his renderings. He obviously has some good tools to work with, but you need a good eye and a fair amount of effort to create a quality photo-realistic composition.
    bestkeptsecret
  • Reply 10 of 11
    stanthemanstantheman Posts: 319member
    I hope iPhone 7 doesn't share any design features with Chinese phones.
  • Reply 11 of 11
    SpamSandwichSpamSandwich Posts: 30,835member
    $150 price target? Is he out of his mind? Not in any near-term scenario.
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