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Jefferies makes bullish call on Apple ahead of earnings, upping target price to US$285

The trillion-dollar company's target price was hiked from US$260, with a ‘buy’ rating maintained on the stock

Apple Inc. -
Jefferies' analysts believe the iPhone 11 will outshine 2018's disappointing iPhone XS launch

Jefferies International said it believes that sales of Apple Inc’s (NASDAQ:AAPL) newest iPhone model may be “better than feared”, as it increased its target price for the tech giant to US$285 per share, up from $260 previously and repeated a 'buy' rating on the stock.

The US investment bank said its analysis of customer traffic for Apple and its carrier stores in the US spells early success for iPhone 11, with a 37% increase in foot traffic on the launch day, compared to a 32% increase for the disappointing iPhone XS launch last year.

Hits to online pages related to the new iPhone also racked up 66% sequential growth in the period, Jefferies added, "exceeding Street expectations” which predict a year-on-year decline in iPhone sales for the 2019 financial year.

“We think this is a strong indication that iPhone performance will come in ahead of conservative Street expectations for the September quarter”, the bank's analysts said in a note to clients on Monday ahead of the company’s fourth-quarter results, due on 30 October, 2019.

“We now see potential for 'better than feared' iPhone 11 performance (the last all-4G cycle) building a nice bridge to 5G,” said Jefferies, which anticipates sales ahead of the 190 million consensus for 2021 thanks to differentiated 5G products, compared with less innovation in previous years.

Last week, UBS raised its price target for Apple to $275 from $235, joining fellow Wall Street banks such as Raymond James which was optimistic on 5G and raised its price target to $280 from $250 per share.

Nevertheless, with 15% tariffs to be slapped on Apple products shipped into the US from China due to start on 15 December, the bank warned there could be a 10% tightening in earnings per share.

Shares in the trillion-dollar valued company were trading 1% higher at US$247.35 in pre-market trading on Monday.

Quick facts: Apple Inc.

Price: 267.99 USD

Market: NASDAQ
Market Cap: $1.17 trillion

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