There’s one reason why Apple stock is a screaming buy right now, and it is not the Vision Pro. Many iPhone users are expected to upgrade their devices when the company launches its next-generation smartphone. Apple’s growing iPhone average selling price means that it could see a nice jump in revenue.
Harsh Chauhan for The Motley Fool:
Wedbush Securities analyst Dan Ives has raised his price target on Apple stock from $205 to $220, claiming that the company is on track to win big from its next iPhone. According to Ives, there are around 250 million iPhones in an upgrade window as they are more than four years old. As a result, the next iteration of the iPhone, which should ideally be launched in the third quarter of 2023, could turn out to be a big growth driver for Apple.
Consumer Intelligence Research Partners pointed out last month that the average selling price of an iPhone jumped to a record $988 in the first quarter of 2023, an increase of 12% over the prior year. Apple achieved this remarkable feat at a time when the global smartphone market was in a state of decline.
Assuming Apple manages to increase its iPhone average sales price to $1,000 when it launches the next iteration of its flagship product, the company’s potential revenue opportunity from the device could be a massive $250 billion (based on the 250 million iPhones that are in an upgrade window as per Wedbush).
Apple generated $200 billion in iPhone revenue over the past four quarters, which means that a combination of strong pricing power and a big installed base of users in an upgrade window could drive significant revenue growth for the company.
MacDailyNews Take: AAPL shares continue to be laughably undervalued.
If you’re an Apple user and somebody offers you $10,000, but the only proviso is they’ll take away your iPhone and you’ll never be able to buy another, you’re not going to take it. If they tell you if you buy another Ford car, they’ll give you $10,000 not to do that, you’ll take the $10,000 and you’ll buy a Chevy instead. It’s an incredibly valuable utility. – Warren Buffett
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My response: “Move along, nothing to see here”. Dan Ives is the most bullish analyst on Wall Street when it comes to AAPL and I suspect there’s a bit of cheerleading going on in ordert to get AAPL to move in the direction that helps his clients.
Why am I saying this? Well, he’s not really describing anything new when trying to justify his statement “company is on track to win big from its next iPhone”. Yes, there quite a few old iPhone users out there that are likely to upgrade – as there are every year. Yes, the ASP on iPhone sales increased – as they do every year. So why should this known behavior suddenly justify an increase in his projected share price? I have no idea. The only reason I can think of is that he wants to pump up the price to the level he told his clients a year ago AAPL would be at.
Every other year is a “super-cycle”. But in off-cycle years we get stock stagnation. Buy Apple for Apple Vision and growth in other products over the next 5-10 years, NOT because the product that they’ve been selling a new version of every year for 15 years is being released again. If anything DON’T but AAPL at its all-time high. Everyone who did that back in January 2022 is just breaking even now (not counting the pitiful dividends that trickled in since then).
The time to have bought was during the pandemic. It was a real bargain then.
Just wait for the recession.
I am a buyer and holder. I’m in at less than $19. It gets boring but my market timing is bad.
Let’s be clear. When a stock analyst sets a new price it’s for a year from now. Daniel Ives is an Apple bull. He predicted it would reach 200 the last time it reached 180. Shock, he has done it now. He is likely to be right. I do disagree, however that it has nothing to do with the Vision Pro, which will sell out the first day it’s on sale. This is a much bigger deal than anyone gets.
Agreed…the Vision Pro has received a very healthy amount of kudos from respected tech pros that have been able to compare what exists to what Apple presented. Even though not even released, by all measures it will be the bar setter. Add to that, the apps that will bolster and Apple’s tour de force of integrating and developing products per the ecosystem. I was a doubter for a long time. Not so now. iPh big? Who knows…but it ain’t going to be an Apple Watch level product. “Spatial Computing” takes it out of the other world mindset (metaverse). More mature and expansive w/o “escaping.”
One time I was looking for a job on “Indeed.com” I noticed that the job openings for stock analyst and politician had the same desired job skills: “Creative Lying Required”