Apple Stock: Early March Insights From Wall Street Analysts

Wall Street analysts continue to talk about what could move Apple stock next. The key topics of conversation this week have been the iPhone 13, the services segment and iPhone shipments in 2021.
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It is time to look at what Wall Street analysts have been saying about Apple stock in the past week. In the previous article, the key topics of conversation were 5G super cycle, streaming video and electric vehicle.

Now, we turn the focus of discussion to next-gen iPhone 13, Apple’s services portfolio and iPhone shipments in the first half of 2021.

Get ready for the iPhone 13

Less than six months after the first 5G model was unveiled, we already start talking about the next iPhone announcement. Rumors have it that Apple’s next device will come in September, and that it will look just like its predecessor, from the outside.

However, Wedbush analyst Dan Ives highlights some key internal features that could make the iPhone 13 “a game changer”. Among them is the 1 terabyte storage option and LiDAR across all price points.

Maybe more importantly, the analyst spoke of his expectations for 100 million units of the new device being produced this year. This is a 25% increase over last year’s figure, for the iPhone 12. He concluded:

“While this number will clearly move around over the coming months, we believe this speaks to an increased confidence with Cook & Co. that this 5G driven product cycle will extend well into 2022 and should also benefit from a post-vaccine consumer reopening environment”.

Services for the win

While investors often get drawn to the iPhone, which represented half of total company sales in calendar 2020, the services segment continues to be a crucial piece of Apple’s ecosystem.

Evercore ISI analyst Amit Daryanani provided some insight on how the segment has been performing lately. According to him:

“App Store revenue grew 30% in February for another strong month, [while] App Store developer revenue was $4.4 billion in the quarter”.

Mr. Daryanani also points out that consensus expectation for service revenues in the March quarter looks a bit too modest. The current estimate of 16% growth, a deceleration from last quarter’s 24%, does not seem consistent with the analyst’s upbeat views on app downloads.

Lastly, Evercore ISI also sees Apple Arcade and Apple TV+ picking up steam in the next five years, with each service reaching at least 80 million subscribers.

I argued, back in January, that Apple Service revenues could double again by 2025. However, this would probably be contingent upon “the laggards” (e.g. Arcade, TV+ and Fitness+) finding more demand. The Apple One bundle might be the nudge that Apple device owners need to become subscribers too.

Bearish on iPhone 12?

Lastly, JPMorgan analyst Samik Chatterjee issued an opinion that sounded bearish at first glance. He is lowering his first half of calendar 2021 estimate on iPhone shipments, reflecting channel checks that suggest decelerated demand growth in China.

However, under the surface, the easing of the analyst’s expectations is more of a tweak than a drastic change of opinion on Apple’s future financial performance. JPMorgan’s iPhone shipment estimates for 2021 has decreased only 6 million from 236 million, a modest 2.5% dip.

In the end, Samik Chatterjee maintains his overweight rating on Apple and price target of $150 that is slightly above Street-wide consensus.

Where the Street stands

From the perspective of ratings and price targets, not much has changed since last week. Wall Street continues to be highly bullish on Apple.

Check out the table below: “strong buy” consensus rating, out of 25 analysts tracked by Stock Rover, and average price target of about $148 per share. At these levels, we are looking at 20% upside opportunity.

Consensus Analyst Rating on Apple stock.

Consensus Analyst Rating on Apple stock.

Twitter speaks

Are Wall Street analysts being realistic about Apple stock? Are they too optimistic, or maybe not optimistic enough? Let’s see what Twitter has to say:

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(Disclaimers: the author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)