Rosenblatt hikes its bearish AAPL price target, but not because of the iPhone

Posted:
in AAPL Investors edited January 2020
Just four days before Apple's crucial holiday quarter earnings report, Rosenblatt Securities has dramatically hiked its target price for Apple stock -- to $250.

AirPods pro and iPhone 11 Pro Max
AirPods pro and iPhone 11 Pro Max


In a note to investors seen by AppleInsider Jun Zhang is seeing positives for Apple in AirPods, with sales far greater than expected. However, he is concerned about iPhone average selling prices from the iPhone 11, and the ultimate impact of the "iPhone SE 2."

Zhang believes that iPhone 11 sales are strong, but high-end model sales are weak. He believes that expectations from others for the 5G upgrade cycle are overblown, because of a $200 premium put on the faster network connectivity.

Additionally, Zhang is predicting that the iPhone that supports the faster mmWave frequencies won't ship until December or the early part of the 2021 March quarter due to antenna design issues. While a shipping date later then September for a mmWave iPhone has been predicted before, this is the first time that there has been any discussion from any source about a difficult antenna design holding up the process.

"We believe the market has become too enthusiastic about the upcoming 5G cycle," wrote Zhang. "We expect the cycle to be similar to a regular smartphone upgrade cycle (or even slower than a regular upgrade cycle) due to consumers waiting for 5G networks to get better and 5G phone prices to drop."

In regards to the potential "iPhone SE 2," Zhang believes that the launch of the new model will cannibalize the sales of the iPhone 7 and iPhone 8.

Zhang previously set a 12.5 profits to earnings multiple on a $12 earnings per share -- for a $150 AAPL price target. The multiple has been increased to 17x with a $14.50 earnings per share estimate, leading to the underwater $250 price target. Zhang is continuing his "sell" advice."

Before the start of trading on Friday morning, Apple stock is worth $320.10 per share.

Zhang's position on Apple is notably lower than other analysts. On January 14, Wedbush set a price target of $350, but believes $400 is possible if everything goes Apple's way in 2020, possibly leading to a $2 trillion valuation by the end of 2021. The expected supercycle for 5G iPhones, along with the strong potential for Apple's Services business, will help drive revenue in the firm's view.

The Canaccord note on January 15 also predicts strong "iPhone 12" sales on top of high demand for the iPhone 11. Canaccord sees sustained Services revenue momentum into the next year, pushing the multiple from 16x to 20x, and the price target from $275 to $355.

Comments

  • Reply 1 of 9
    FatmanFatman Posts: 513member
    Apple is covering all bases in 2020 - and will fill gaps in demand for certain products at certain price points - with lower priced handsets on one end of the product mix to cutting edge Pro models at the top - something for everyone. Their biggest threat is the Chinese subsidized phones - where State backed companies will operate at a loss and ‘do the impossible’ ... produce low price phones with expensive pro features.
    edited January 2020 watto_cobra
  • Reply 2 of 9
    In regards to the potential "iPhone SE 2," Zhang believes that the launch of the new model will cannibalize the sales of the iPhone 7 and iPhone 8.

    Weird argument..  customers will buy either the one or the other.. either way Apple sells a phone..

    Besides, Apple has cannibalized before and undoubtedly will do it again.. They go where they think they need to be.. And who knows, they might scratch the 8 and 7 from their lineup..
    watto_cobra
  • Reply 3 of 9
    WHO LISTENS TO THIS CLOWN!?

    By all accounts the se2 is supposed to replace the 7/8 models.

    And rarely is the high end model the best seller.

    Anyone else actually in the business knows that 5G is in the hype cycle and completely overblown. DED will likely remind us of these items. 
    watto_cobra
  • Reply 4 of 9
    jcs2305jcs2305 Posts: 1,304member
    dedgecko said:
    WHO LISTENS TO THIS CLOWN!?

    By all accounts the se2 is supposed to replace the 7/8 models.

    And rarely is the high end model the best seller.

    Anyone else actually in the business knows that 5G is in the hype cycle and completely overblown. DED will likely remind us of these items. 
    I was thinking the same.. How long do they think Apple is really going to produce and sell a meaningful amount of the iPhone 7 new.. that they would be concerned with cannibalization by the SE2? Considering by most reports the body of the SE2 is identical to the 8.. why would they continue to produce the 7.

    dedgeckowatto_cobra
  • Reply 5 of 9
    jdgazjdgaz Posts: 393member
    Glad I haven't followed this guys advise. I would have been shorting it and now be in debtors prison.
    watto_cobra
  • Reply 6 of 9
    pscooter63pscooter63 Posts: 1,064member
    In regards to the potential "iPhone SE 2," Zhang believes that the launch of the new model will cannibalize the sales of the iPhone 7 and iPhone 8.
    I wonder if this guy said the same thing back back in 2016, when the original SE was announced.
    We all know how that turned out...
    edited January 2020 watto_cobra
  • Reply 7 of 9
    hentaiboyhentaiboy Posts: 1,249member
    Interesting thought though - what will happen to the share price if Apple doesn’t release a 5G phone this year?
  • Reply 8 of 9
    hentaiboy said:
    Interesting thought though - what will happen to the share price if Apple doesn’t release a 5G phone this year?
    Nothing, or the media clowns will claim Apple is Doomed ™️ 

    The stock price will go down, possibly.

    Given the float (excess shares that typically react wildly to financial news) has been drastically reduced. We might see a dip.  BTFD!!  Scared money leaves dumb investors and goes to those that know better. 

    I only started a position in AAPL in 3/2018, slowly adding to it over the year - why didn’t I start investing when I was a young adult! (Not specific to AAPL, looking at you NFLX, my White Whale).  When the stock started tanking in 12/2018, I doubled my position. I only wish I had waited to buy at the bottom, but market timing is really, really hard.  I still add a little here and there, but as a buy and hold AAPL investor, I’ll take my 75% gain since I started.

    Note: this is not investment advice, I have no idea what your situation is. Typically if you need liquid cash within the next 3-5 years, best to keep it as cash. Otherwise invest in companies that you know and add to your winners rather double down on things that may looked good at first, but now there are multiple, management specified factors that no longer provide a rosy outlook, long term. 
    badmonk
  • Reply 9 of 9
    coolfactorcoolfactor Posts: 1,913member
    He got something right.... his departure from this gig.


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