5G, AirPods and services are pushing Apple to $2t in 2021 – analyst
2020 could be a boom year for Apple, according to Wedbush analyst Daniel Ives, who cites the following main factors in his latest client research.
What is driving Apple in 2020?
Apple should post “clear upside” in the upcoming December quarter he promised, predicting strong March guidance. He also told investors asking if the good news is baked into Apple shares: “The answer from our vantage point is a resounding No.”
He cites the following catalysts:
- Strong iPhone demand on a global basis.
- This includes in key growth markets such as China and India, as well as U.S.
- Demand is strong for iPhone 11 and likely to remain so this year.
- 5G iPhones likely to maintain demand when they appear, and will likely drive an iPhone upgrade ‘supercycle’ – Apple has the “best 5G play” in the industry into the next year.
- Predicts as many as 350 million iPhone users may be in the upgrade window.
- Apple’s $50 billion annual services stream is underscoring this. The analyst cites Services segment as having up to a $650 billion valuation on strength of 925 million active iPhones worldwide.
- Apple has potential to be a $2 trillion company by the end of 2021.
- Mac and iPad revenues will remain static, he predicts.
- Wearables, Home and Accessories revenue will continue to grow.
- Notes “jaw dropping” AirPods sales.
Predicts up to $400 per share is possible
The analyst holds a $350 target on Apple stock, but cites $400 as the bull market case he says could be reached by the end of 2020.
“Looking out further, we believe by the end of 2021 Apple has potential to be the first $2 trillion valuation given the 5G tailwinds and services momentum potential over the coming years,” said Ives.
He’s not the first analyst to raise price targets on Apple stock as market rumor suggests strong sales across the company’s iPhones, services and wearables. Tom Forte at Davidson holds a $375 target, Evercore a $360 and UBS at $355. Four analysts (Wedbush, Needham, Jefferies, Argus Research) now cite a $350 target.
We’ll find out more on January 28 when Apple hosts its next fiscal call.