Apple is a ‘Compelling Name To Own’ Right Now, iPhone Sales Trending Ahead of Guidance – Wedbush’s Ives

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Wedbush analyst Daniel Ives has reiterated an Outperform rating and a $200.00 per share price target.

For Ives, Apple (NASDAQ:AAPL) “remains our favorite tech name” on the back of the strength in Services and iPhone. The analyst believes Apple is seeing “better than expected” iPhone demand that is likely to trend ahead of the company’s guidance for this quarter.

“As of now we believe iPhone demand is holding up better than expected (despite the various supply issues that have plagued Apple and the rest of the tech sector) and are trending better than management’s guidance thus far in the quarter.

“We estimate that Apple has gained roughly 300 bps of market share in the key China region over the last 12 months on the heels of its 5G iPhone 12/iPhone 13 product cycle with iPhone 14 adding to these gains looking ahead,” Ives said in a note.

Similar to Bank of America’s tech analysts, Ives forecasts that Apple has an installed base of over 1.8 billion devices, led by over 1 billion iPhones around the globe.

“The stickiness of the iPhone upgrade cycle is being underestimated by investors in our opinion as we estimate that roughly 240 million of Apple’s 1 billion iPhones have not been upgraded to a new smartphone in roughly 3.5 years. This importantly speaks to the Apple growth path over the next 12 to 18 months as iPhone 14 is set to be unveiled in the September timeframe,” he added.

Finally, Ives estimates that Apple’s Services business alone is worth more than $1 trillion. In combination with the iPhone strength, this makes the risk-reward “very compelling at current levels.”

Apple stock price is up 1.6% in pre-market Friday after closing at $137.35 yesterday.