Apple Inc. (AAPL) - Get Report shares extended gains into fresh all-time highs Friday after analysts at Credit Suisse boosted their price target for the iPhone maker, citing sharply improving sales in China.
Apple's December iPhone shipments in China rose 18.7% from the same period last year, Credit Suisse noted from data published by the country's Ministry of Industry Information Technology (MIIT), well ahead of the overall 13.7% decline in overall domestic smartphone sales. Reuters reported Thursday that data from the China Academy of Information and Communications Technology, as well as its own calculations, indicated shipments of around 3.2 million units in December, an 18% increase from the same period last year.
Price cuts from Apple and a consumer shift towards cheaper handsets such as the iPhone 11, could mean Apple's calendar-year fourth quarter revenues in China are likely to fall by around 23% on a constant currency basis, Credit Suisse suggested, but the overall trend is improving enough for the bank to lift its price target by nearly 25%, to $275, as a result of the momentum shift.
"We’re encouraged by this sharp bounce back in shipments," said Credit Suisse analyst Matthew Cabral. "While we note that monthly sell-in data can be volatile, this strong performance marks a significant improvement from the sizeable drops in October and November, albeit against a relatively easy compare given the challenges in Greater China in the final three months of 2018."
"Also of note is a significantly improved US/China trade situation since our last update, with potential for 15% tariffs on the majority of Apple’s portfolio (iPhone, iPad, and Mac) no longer an overhang, in our view," Cabral added.
Apple shares were marked 0.21% higher in early trading Friday to change hands at $310.40 each, after hitting a record high $311.40 at the opening bell, a move that would take its one-year gain to a staggering 102.5% and value the Cupertino, California-based tech giant at just under $1.4 trillion.
Apple will publish its fiscal first quarter earnings on January 28, with analysts expecting earnings per share of $4.53 and overall revenues of $88.22 billion.
Apple said on October 30 that it sees December quarter sales in the region of $85.5 billion to $89.5 billion after it said fourth quarter services revenues grew 18% to a record $12.5 billion, offsetting the 10% gain in iPhone revenues, which hit $36.76 billion.
Apple's earnings for the three months ending in September, the final quarter of its 2019 fiscal year, fell 6.7% from the same period in 2018 to $3.03 per share, while group revenues rose 1.8% to $64.04 billion, thanks in part to a surge in wearable and home sales that offset another sales dip in China and the fourth consecutive quarter of declining iPhone sales.