Apple Shares Gain on Wedbush Price Target Boost: Bull Case Pegged At $700 Amid 5G iPhone 'Supercycle'

Wedbush analyst Dan Ives says Apple has a 'once in a decade' opportunity to capitalize on iPhone upgrades as 5G networks roll out around the world, and argues a bull case of $700 per share for the world's biggest tech company.
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Apple Inc.  (AAPL) - Get Report shares moved higher Wednesday after analysts at Wedbush Securities issued yet another price target boost for the tech giant, setting out a bull case that could lift it to $700 per share.

Wedbush analyst Dan Ives, a consistent and long-term Apple bull, lifted his Apple price target to $600 per share Wednesday, the highest on Wall Street, amid what he calls a 'once in a decade' opportunity for the tech giant to take advantage of iPhone upgrades ahead of the advance of 5G infrastructure rollouts and the launch of the iPhone 12.

Ives says around 350 million of the 950 million iPhones in circulation could be upgraded over the next 12 to 18 months, with around 20% of those coming from China, arguably Apple's most important market.

"China remains a key ingredient in Apple’s recipe for success  (and) to this point we are seeing considerable strength from the China region over the last few months with positive trends heading into the fall, an impressive trajectory we expect to continue heading into the next 6 to 9 months," Ives said. "Despite the noise, based on our recent discussions with contacts within the Beltway we strongly believe the WeChat ban will not negatively impact or disrupt Apple's iPhone ecosystem within the key China market."

Apple shares were marked 1.13% higher in pre-market trading Wednesday to indicate an opening bell price of $502.70 each, a move that would extend the stock's three-month gain to around 57.6% and value the Cupertino, California-based company at around $2.15 trillion.

Ives says his 'bull case' for Apple includes a price target of $700 per share, a value he sees as realistic given that the iPhone 12 "represents the most significant product cycle for Cook & Co. since iPhone 6 in 2014 and will be another defining chapter in the Apple growth story looking ahead despite a softer consumer spending environment in our opinion."

"We still believe many on the Street are underestimating the massive pent-up demand around this supercycle for Apple, which remains the opportunity for the bulls heading into 2021 as this monetization engine heads into its next gear," Ives said.

Apple shares were marked 1% higher in early trading  to change hands $504.00 each, a move that would extend the stock's three month gain to around 57% and value the Cupertino, California-based company at around $2.16 trillion.

Apple now accounts for around 7% of the S&P 500's total market capitalization, and is worth more than the combined value of the benchmark's 200 smallest companies, according to Reuters data and reporting.

The stock's impact on the Dow Jones Industrial Average, however, is set to wane next week after the group announced a four-for-one stock split that will take effect on August 31.

Wednesday's pre-market gain, for examples, adds around 25 points to the Dow, based on its current share price in pre-market trading. A similar gain at $125 per share -- when the split becomes effective on August 31 -- would add only 5 points to the price-weighted average. 

Apple said earnings for the three months ending in June, the group's fiscal third quarter, rose 25.9% from the same period last year to $2.58 per share, well ahead of the $2.05 per share Street consensus forecast. Group revenues rose 13.4% to a Street-beating $59.7 billion, Apple said, with gains in every geographical region and across all product line.

iPhone revenues rose 2% from last year to a forecast-beating $26.4 billion, despite the COVID-19 headwinds, thanks in part to a solid debut for the $399 iPhone SE, which was launched earlier this year. iPad and iMac sales, meanwhile, rose 22% and 31% respectively as work-from-home shifts powered computer purchases. Services revenues were pegged at $13.2 billion, just shy of Apple's recent record and up 15% from last year.

Apple declined to offer a near-term profit forecast, "given the uncertainty around the world' and the ongoing COVID-19 impact, but noted that it expects to see continued gains for the iPhone, despite likely delays of "a few weeks" for its iPhone 12 launch in September.