2020 promises to be a great year for Apple, according to Wedbush analyst Dan Ives. In a message to clients, Ives describes 2019 as an “historic year” for Apple. Not only has Apple come out on top this year, but he thinks next year could be even better.
And he’s slapped the highest price target on AAPL as a result.
“A year ago Cupertino was facing major Herculean-like challenges around lagging China demand, tariff escalation on the horizon, increasing competition on smartphones, and trailing Samsung and others in the key 5G race,” Ives writes. “Investors were throwing in the towel on the name with many on the Street thinking the Apple growth story was over and in the rear view mirror.”
Instead, Apple defied expectations. Ives argues that Tim Cook had his “finest hour” in 2019. Cook’s accomplishments included leading Apple through the China growth struggles, settling the lawsuit with Qualcomm, acquiring Intel’s 5G modem business, and launching the iPhone 11.
A whole lot of possibilities for Apple in 2020
In 2020, Ives expects the iPhone will remain “comfortably ahead” of projections. He thinks Apple will sell between 185 million and 190 million units of its smartphones. Furthermore, the 2020 iPhone refresh will “open the floodgates” for user upgrades. This will involve the 5G iPhone, Apple’s first 5G handset. He writes:
“To this point, we believe 200 million units could be the starting point for 5G Apple smartphone demand as roughly 350 million iPhones within the 900 million installed base of Cupertino are currently in the window of an upgrade opportunity.”
On top of this, Ives believes that China will see renewed growth, particularly as Huawei struggles at the high end of the market. While he doesn’t mention it, I think AirPods will also continue to be a phenomenal success for Apple. The company’s subscription services will also grow to become a bigger part of Apple’s business.
Overall, Wedbush has a price target of $350 for Apple. That’s up from its previous $325 estimate. At present, AAPL is trading at $282.28. This gives Apple a market cap of $1.3 trillion.
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