Apple (NASDAQ:AAPL) shares appear to be experiencing a mini wobble, tumbling 6% over the past week. This comes as the market seems concerned about a recent Wall Street Journal report stating that China has instructed central government officials to refrain from using iPhones.
Apparently, despite the absence of an official policy on the matter, Chinese officials have been avoiding iPhones for some time, even prior to the pandemic. However, now it appears to be an official instruction.
It might sound like déjà vu with China and a tech ban, but according to Wedbush analyst Daniel Ives, the whole story is ‘way overblown.’
“To quantify,” explained the 5-star analyst, “it’s less than ~500k iPhones of roughly 45 million we expect to be sold in China over the next 12 months. We believe despite the loud noise Apple has seen massive share gains in China smartphone market as we estimate Cupertino has gained roughly 300 bps of market share in the key China market over the last 18 months…”
Not to mention, the upcoming release of the iPhone 15 will be giving Apple “incremental momentum on this front.”
The latest iteration of Apple’s flagship product is slated to get an unveiling next Tuesday (September 12) and while Ives anticipates the base model prices will stay the same, given the enhanced technology, chips, and battery technology anticipated for the iPhone 15 Pro/Max models, some strategic upward pricing move from Apple should be expected. Specifically, Ives thinks the Pro/Max models will be subject to a $100 price increase.
Ives reckons that around 25% of the 1.2 billion global iPhone users haven’t upgraded their phones over the past 4 years, while he also expects a “heavy iPhone Pro mix.” This should help bump ASPs (average selling prices) towards $900/$925, thereby setting the scene for a “new ‘mini super cycle’ despite the choppy macro.”
So, essentially good news for Apple, but what does it all mean for investors? Ives maintained an Outperform (i.e., Buy) rating to go alongside a $230 price target. Should the figure be met, investors will be sitting on returns of 29% in 12 months’ time. (To watch Ives’ track record, click here)
Overall, the Street gives AAPL a Moderate Buy consensus rating, based on 30 recent analyst reviews that include 22 Buys and 8 Holds. The stock’s current trading price is $178.18, and its $207.03 average price target suggests that it will appreciate by 16% in the year ahead. (See Apple stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
