Goldman Sachs raises Apple price target, boosts stock

Expects new iPhones to start at $999 and “drive meaningful upside.”

From a note to investors Friday by Goldman Sachs analyst Simona Jankowski:

The next iPhone is shaping up to be the most anticipated iPhone since the launch of the iPhone 6 in September 2014, driven by a major redesign marking the 10-year anniversary of the flagship device. Speculation in the press around the likely features and design elements has been wide ranging, and often inconsistent, over the last few months, which is not surprising as Apple usually explores multiple designs in parallel. However, with only 4 months left until launch, we believe Apple has now locked down the design.

Starting with the iPhone 6 launch in 2014, Apple’s cadence has been to introduce two sizes in the flagship iPhone line-up in September: a larger, 5.5” form factor (the “Plus” model) and a standard 4.7”size. In 2017, we expect Apple to add a new member to the family with a larger, 5.8” screen. Even though the ultimate names may differ, throughout this report, we will be referring to the upcoming 4.7” iPhone as the “iPhone 7s”, the 5.5” iPhone as the “iPhone 7s Plus,” and the potential 5.8” iPhone as the “iPhone 8.”

While nothing has been confirmed at this stage (as is typical ahead of an Apple product launch), multiple news outlets (including Bloomberg) have reported that the iPhone 8 will include a nearly edge-to-edge OLED display that will result in a larger display size than the iPhone 7 Plus, packed into a form factor more similar to the iPhone 7.

iphone screen sizes

Click to enlarge. Not seeing? Try the website.

Interestingly, her list of features in the iPhone 8 does not include wireless charging:

  • 5.8″OLED screen (adds $35)
  • No bezel, all screen
  • 3D sensing (adds $20)
  • Better, faster NAND/DRAM memory (adds $16 to $29)
  • Capacity starting at 128GB
  • A11 processor
  • No home button
  • Biometric authentication

Reiterate Buy, raise price target to $170 from $164.

Below: Why Jankowski thinks the new iPhone will break the four-figure barrier:

 

Click to enlarge. Not seeing? Try the website.

4 Comments

  1. David Emery said:

    “Start at $999”? I sure hope not! At least for me, that moves the phone into the “durable goods” category where I’m much less likely to buy and more importantly to upgrade. And there’s nothing in that list (even if I add wireless charging) that would make me jump out and trade-in my will-be-2-year-old 6s.

    0
    May 12, 2017
  2. Fred Stein said:

    Exhibit 11 shows a wide price spectrum. Nice!
    To David Emery’s point about what would drive upgrades: A dual lens in the mid size model and at a price, lower than $769 base.
    There’s great opportunity in Apple’s installed base for non premium buyers, even though the press and analysts focus on the next big thing.

    1
    May 12, 2017
  3. John Kirk said:

    Well, Apple has already gone up a lot these past few months, so this is kind of like saying buy high because we expect it to go higher.

    0
    May 12, 2017
  4. Robert Paul Leitao said:

    As a subscriber to Apple’s annual upgrade program, the speculated price of the “iPhone 8” versus the price of an “iPhone 7s Plus” will work to a few pennies a day. It’s not so much the cost as it is the desired features.

    For consumers concerned about the cost of a new iPhone, releasing three new handsets simultaneously provides options to fit most budgets. How long an individual consumer chooses to wait to upgrade becomes almost immaterial because more than nine out of ten iPhone owners will choose a new iPhone for their next purchase. It becomes a serial upgrade phenomenon in which the individual consumer chooses the pace of upgrades. In other words, most iPhone owners “subscribe” to Apple innovation with the benefit of choosing when and how frequently to upgrade their handset.

    0
    May 13, 2017

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