UBS: Buy Apple stock because strong iPhone demand is good news for all its products

In a research note sent to clients on Thursday, UBS analyst David Vogt reports that a survey of more than 7,000 smartphone users in the U.S., China, Germany, the U.K., and Japan found strong iPhone demand with 22% intending to buy iPhones within the next 12 months, the highest percentage in five years.

Apple Park in Cupertino, California
Apple Park in Cupertino, California

Eric J. Savitz for Barron’s:

In addition, iPhone retention rates—the number of people who intend to stay on the platform when they switch phones—reached 86%, the best reading in seven years. Interest in 5G wireless is “modestly improved,” he writes, consistent with Apple’s view that we are in the early days of 5G adoption. As a result, Apple’s current stock price “does not reflect the stickiness of the Apple ecosystem,” he says.

Vogt adds that every region showed a “solid” year-over-year increase in iPhone purchase intent, other than China, which was flat.

The UBS analyst also stresses that strong iPhone demand has spillover effects on other Apple products and services. The survey also asked about the Apple Watch. About 37% of respondents said they were likely or somewhat likely to buy a smartwatch over the next 12 months, while 80% were aware of the Apple Watch.

Vogt maintains his Buy rating and $155 price target.

MacDailyNews Take: Echoing Morgan Stanley’s Katy Huberty who said on Wednesday that strong iPhone demand runs counter to Apple’s recent stock performance.

3 Comments

  1. As soon as Apple brings back touch ID in any form (preferably a home button. Care less about bezel), I will immediately resurrect my annual iPhone purchasing cycle again. My “super cycle” stopped when Apple hyped up X but I am perfectly happy with SE 2020 I have now now. It’s even girly red colour! I am one of those trapped in walled garden since late 80’s and even worse, an incurable gadget freak too. I can’t believe I no longer a new toy envy, and calmly wait until right product comes by. But no Android and Samsung wrong please.

  2. Apple product sales don’t seem to have any connection to how Wall Street values Apple stock. Apple’s current value is rather mediocre despite back to back stellar quarters. I’m not complaining, I’m just giving an opinion. I’m sure Apple’s value will increase by the end of the year, so I’m not concerned.

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