Two analysts are predicting a new high for Apple (AAPL) stock this year, suggesting the stock could climb to $375 or $400 by the year’s end.
While many expect Apple’s 2020 iPhone’s support for 5G to boost sales this year, analysts D.A. Davidson says that the impact will last well beyond this year. In an investor’s note shared by Business Insider, the firm states three reasons for expecting a long-lasting impact by 5G.
1.) Not everyone will be in the upgrade window this year, which means we’ll see iPhone users upgrading for 5G both this year and next.
“There is enough complexity and hype when it comes to 5G that we believe Apple can exploit this multi-year opportunity and generate positive smartphone unit growth for, at least, its next two product launches – fall of 2020 and fall of 2021,” analyst Tom Forte wrote.
2.) More iPhone owners equal more opportunities for increased sales of Apple wearables.
The “maturation of the smartphone market” forced the Cupertino, California-based company to pivot to other revenue drivers, the analyst said. Investing in its wearables and services businesses places Apple in a healthy position to reap major revenue growth from the 5G cycle, he added.
3.) The flexibility of the zero-interest payment plan on the Apple Card means customers can benefit from the same interest-free purchase option as the iPhone Upgrade Program but can choose how often to upgrade and how quickly to pay off the balance.
All of that adds up to a new AAPL high of $375 per share by the end of the year, according to D.A. Davidson.
Analyst firm Wedbush expects even greater things from Apple, as although they are sticking to a $350 year-end target for AAPL, it is arguing that “the fundamentals support $400.”
Wedbush also points to 5G adoption to support its estimates, as well as investors realizing what the higher iPhone adoption will mean for future services revenue.
Many investors are asking us: Is all the good news baked into shares after an historic upward move over the last year and into early this year? The answer from our vantage point is a resounding NO, as we view only the first part of this massive upgrade opportunity leading to a transformational 5G “super cycle” with 200 million to 220 million iPhone units now the new line in sand for demand based on our recent Asia supply chain checks. Coupling this dynamic with a metamorphosis-like valuation re-rating by the Street around the company’s $50 billion+ annual services revenue stream is the 1-2 punch to how we ultimately see a stock in the bull case $400 valuation by year-end.
Wedbush suggests APPL could hit a $2 trillion valuation by the end of 2021.
However, as mentioned by 9to5Mac, not everyone shares the above optimism for APPL, as Deutsche Bank expects the stock to lose 6% of its value by the end of the year, and Goldman Sachs suggested the company will lose a third of its value this year.