Apple is readying 75 million 80 million iPhones ahead of next month’s iPhone 11 launch, says Wedbush analyst Daniel Ives.
Despite some of his gloomier peers “yelling fire in a crowded theater” about Apple, he’s confident about Apple’s future. That’s even with the ongoing U.S. vs. China trade tensions looming menacingly in the background.
“We believe Apple is on a trajectory to sell between 180 million to 185 million iPhone units in [financial year 2020] ,” he writes. He believes that average sale price will remain “relatively stable” over that same period.
Reasons to be optimistic
Ives acknowledges some of the challenges that exist in China. Specifically, he notes that there has been a “discernible nationalistic” push for some suppliers in China to buy Chinese handsets over American ones. Nonetheless, Ives predicts that “between 60 million to 70 million Chinese consumers will be in the window of an iPhone upgrade opportunity for Apple over the next 12 to 18 months.” Of these, Ives writes that he thinks the “vast majority” will upgrade their handsets.
As such, Ives believes that we’re headed into a great period for Apple. His bullish thesis is driven by the 900 million active iPhone users that exist worldwide. Of these, he believes a third will be in their upgrade window over the next year-and-a-half. If this year’s iPhone release can hold steady, Apple will be well posed to take full advantage of the “highly anticipated 5G driven iPhone launch in 2020.”
So what does all of this mean for Apple’s share price? As a result of his enthusiastic appraisal, Ives predicts that AAPL will hit $245 in the next year. Right now, AAPL is trading at $202.75. If investors can hold their nerve, that’s a nice potential return on investment over the next year. Unless Apple goes crazy with the share repurchases, by my reckoning that also puts Apple back in $1 trillion territory.