The upcoming iPhone 15 product cycle could be another “trophy case moment” for Apple Inc (NASDAQ:AAPL), Wedbush Securities analysts wrote in a note to clients on Wednesday, raising their 12-month target price on the stock to $220 per share from $205 with an ‘Outperform’ rating.
Starting this Fall, they believe expected iPhone units and average selling prices (ASPs) could easily surpass current Street expectations heading into next “mini super cycle” release set to play out over the next year.
“Based on our current analysis we estimate roughly 250 million iPhones have not been upgraded in over 4 years and sets Apple up for a major installed base upgrade cycle heading into this anniversary 15 year release,” the analysts said.
They believe that with more customers heading down the Apple Pro phone path, especially in China, ASPs could start to approach the ~$925 level for the iPhone 15 cycle, representing a roughly $100 increase in the last 18 months.
Perhaps more impressive, analysts at Wedbush estimate Apple is on pace to approach $100 billion of annual services revenue by fiscal 2024, up from roughly $50 billion plus of services revenue in generated just four years earlier.
“Herein lies the key to the valuation re-rating that we believe will continue to take place around Apple's stock as the Street further appreciates the sheer massive potential of this services revenue that we now assign a valuation in the $1.4 trillion range,” they added.
That said, the analysts believe Apple's fair valuation could be in the $3.5 trillion range with a bull case $4 trillion valuation by fiscal 2025.
Shares of Apple rose 1.2% to $180.01 in late afternoon trading on Thursday, giving the company a market cap of about $2.83 trillion.
Contact Sean at sean@proactiveinvestors.com