Piper Jaffray ups AAPL price target to $305, sees 'perfect storm' for 'iPhone 5G'

Posted:
in AAPL Investors edited December 2019
Sales expectations for Apple's upcoming "iPhone 5G" are too low, according research investment firm Piper Jaffray, which raised its price target on shares of Apple this week behind mounting anticipation for the new handset and ongoing dominance in the wearables market.




In a research note seen by AppleInsider on Friday, Piper Jaffray analyst Michael Olson cites a survey of consumer interest to back up his claims about "iPhone 5G" demand. Looking forward, Olson sees a "perfect storm" with the existing iPhone expected to perform at least at estimated sales volumes, and non-iPhone sales, specifically wearables like the Apple Watch, AirPods, and AirPods Pro "trending better than expected" through the end of the year.

Olson polled iPhone owners, and asked if they would upgrade to a 5G iPhone, if it cost $1200. Interest has only increased from the survey in June, where 18% of respondents said that they would buy a new iPhone with 5G.

"Our third survey of >1,000 U.S. iPhone owners shows 23% are interested in purchasing a relatively higher ASP ($1,200) 5G iPhone, unchanged from our Sep-19 survey and up from 18% in our Jun-19 survey," Olson writes. "We see this as a strong level of interest given limited 5G marketing/ chatter to date and the high price point used in our survey."

The last "major" iPhone cycle, according to Olson, was the iPhone 6 and iPhone 6 Plus. The latter drove 52% year-over-year iPhone revenue, and 37% unit growth in 2015. While Olson isn't expecting that much of a push, Piper Jaffray is modeling a 3% year-over-year revenue growth in the iPhone in fiscal year 2021, which begins for Apple right after the flagship iPhone release cycle in October 2020.

Piper Jaffray iPhone scenario analysis and historical AAPL price points
Piper Jaffray iPhone scenario analysis and historical AAPL price points


As a result of this demand, Olson is raising Piper Jaffray's AAPL price target to $305 from $290, based on a new 20x multiple of estimated 2021 calendar year earnings per share of $15.25. That's up from a 19x multiple the analyst had been using previously, as he sees "increasing confidence in the combination of potential for strong near-term results (solid trends with iPhone and wearables & services) and growing anticipation around the upcoming [late calendar year 2020] 5G iPhone cycle."

Apple stock is on a tear as of late, and is presently trading for $280.48, up 0.10% in pre market trading on the NASDAQ stock market.

Comments

  • Reply 1 of 12
    I am absolutely bullish about AAPL, but 5G is a joke. Other than a sales pitch, about all 5G can do for the average user is ruin their smartphone's battery life. Fortunately very few people have 5G smartphones - but if a large % get snookered into it, there will be angry users 
    DAalsethlkruppwatto_cobra
  • Reply 2 of 12
    flydogflydog Posts: 1,095member
    ted13 said:
    I am absolutely bullish about AAPL, but 5G is a joke. Other than a sales pitch, about all 5G can do for the average user is ruin their smartphone's battery life. Fortunately very few people have 5G smartphones - but if a large % get snookered into it, there will be angry users 
    Which of Apple's non-existent 5G phones did you use to determine that it ruins battery life?
    flyingdpRayz2016Carnage
  • Reply 3 of 12
    MacProMacPro Posts: 19,500member
    Count down to $400 by 2021.
    SpamSandwichwatto_cobra
  • Reply 4 of 12
    GeorgeBMacGeorgeBMac Posts: 11,421member
    Yeh, I totally agree:
    1)   5G is the biggest thing coming to mobile devices  since 4G
    2)   Apple basically punted with iPhone 11 -- it's mostly just a clone of iPhone 10 with a couple extra bells & whistles.   Apple has been in reset mode for a and they are due to break out some ground breaking, exciting stuff.   That'll be iPhone 12.

    Like wise, I see some serious upgrades coming to MacBooks over the next couple years -- as well as the long awaited cursor/mouse for the iPad making it a true laptop competitor.
  • Reply 5 of 12
    Yeh, I totally agree:
    1)   5G is the biggest thing coming to mobile devices  since 4G
    2)   Apple basically punted with iPhone 11 -- it's mostly just a clone of iPhone 10 with a couple extra bells & whistles.   Apple has been in reset mode for a and they are due to break out some ground breaking, exciting stuff.   That'll be iPhone 12.

    Like wise, I see some serious upgrades coming to MacBooks over the next couple years -- as well as the long awaited cursor/mouse for the iPad making it a true laptop competitor.
    So basically your\’re wish casting. What’s going to be groundbreaking about iPhone 12? 5G?  Please.
    ted13watto_cobra
  • Reply 6 of 12
    flydog said:
    ted13 said:
    I am absolutely bullish about AAPL, but 5G is a joke. Other than a sales pitch, about all 5G can do for the average user is ruin their smartphone's battery life. Fortunately very few people have 5G smartphones - but if a large % get snookered into it, there will be angry users 
    Which of Apple's non-existent 5G phones did you use to determine that it ruins battery life?
    You must be one of those analysts 
    watto_cobra
  • Reply 7 of 12
    MacPro said:
    Count down to $400 by 2021.
    You're going a bit overboard. That would be a $120 move from today. Apple has gone up almost $140 this year. How long will Wall Street let this continue for Apple? Not every country is going to need 5G smartphones and Apple's models will still cost more than the rest. Apple still won't be able to sell any significant number of iPhones in India. Chinese consumers will likely buy domestic brand smartphones. There just doesn't seem to be any future iPhone growth for Apple. Big investors are greedy and only high growth excites them. Anyway, that's how I see it. I hope I'm wrong. https://www.thestreet.com/investing/best-stocks-of-year-apple-is-number-1
    edited December 2019
  • Reply 8 of 12
    MacPro said:
    Count down to $400 by 2021.
    From your lips to Wall Street’s ears...
    Carnage
  • Reply 9 of 12
    GeorgeBMacGeorgeBMac Posts: 11,421member
    Yeh, I totally agree:
    1)   5G is the biggest thing coming to mobile devices  since 4G
    2)   Apple basically punted with iPhone 11 -- it's mostly just a clone of iPhone 10 with a couple extra bells & whistles.   Apple has been in reset mode for a and they are due to break out some ground breaking, exciting stuff.   That'll be iPhone 12.

    Like wise, I see some serious upgrades coming to MacBooks over the next couple years -- as well as the long awaited cursor/mouse for the iPad making it a true laptop competitor.
    So basically your\’re wish casting. What’s going to be groundbreaking about iPhone 12? 5G?  Please.

    You might try re-reading my post if you have questions.
  • Reply 10 of 12
    bluefire1bluefire1 Posts: 1,227member
    Yeh, I totally agree:
    1)   5G is the biggest thing coming to mobile devices  since 4G
    2)   Apple basically punted with iPhone 11 -- it's mostly just a clone of iPhone 10 with a couple extra bells & whistles.   Apple has been in reset mode for a and they are due to break out some ground breaking, exciting stuff.   That'll be iPhone 12.

    Like wise, I see some serious upgrades coming to MacBooks over the next couple years -- as well as the long awaited cursor/mouse for the iPad making it a true laptop competitor.
    The extra battery life on iPhone 11 means no more battery case, and the camera images are exceptional.
    ted13watto_cobra
  • Reply 11 of 12
    MacPro said:
    Count down to $400 by 2021.


    This year has been so great. I don't remenber the last time AAPL grew that fast. So fast, one of the securities account in which I have some sold them because I mistakenly had a flag to sell when they hit +200%. Luckily I got a notification and just repurchased the same day. Since then they grew another ~ +70%.

    I still want to buy more but I'm scared it could stagnate the next 1-2 years. I really envy people who had like 50-100.000 € and the guts to invest 15 years ago.

  • Reply 12 of 12
    Carnage said:
    MacPro said:
    Count down to $400 by 2021.


    This year has been so great. I don't remenber the last time AAPL grew that fast. So fast, one of the securities account in which I have some sold them because I mistakenly had a flag to sell when they hit +200%. Luckily I got a notification and just repurchased the same day. Since then they grew another ~ +70%.

    I still want to buy more but I'm scared it could stagnate the next 1-2 years. I really envy people who had like 50-100.000 € and the guts to invest 15 years ago.

    Trump has done wonders for the stock market.
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