J.P. Morgan hikes Apple price target to $296

From a note to clients by analyst Samik Chatterjee that landed on my desktop Sunday:

Early visibility into 2020/2021 iPhone product cycles are offering incremental reasons to be positive relative to volume implications, including raising our volume forecasts as well as our EPS estimates and price target. Key findings from our supply chain checks, include:

1) Apple is likely to launch four new iPhone models in September 2020 (one 5.4”, two 6.1”, and one 6.7”), including all four with 5G capabilities, but only two with ToF World-facing 3D Sensing;
2) Expect two mmWave capable models (also supporting sub-6 GHz); expect two lower-end models to support only sub-6 GHz;
3) Starting 2021, we expect Apple to smooth iPhone seasonality by shortening launch intervals and introducing two new iPhones in both 1H21 and 2H21; and 4) Updated BOM analysis points to an increase of $30-$40 for 2020 iPhones vs. comparable 2019 iPhones, more modest relative to investor expectations.

Maintains Overweight rating, raises price target to $296 from $290.

Two bar charts:

jpmorgan hikes target 296

jpmorgan hikes target 296

My take: Good on Chatterjee for showing iPhone installed base growth. Not every analyst does that.

8 Comments

    • From a Texas Instruments explainer: “A 3D time-of-flight (TOF) camera works by illuminating the scene with a modulated light source, and observing the reflected light. … An imaging sensor designed to respond to the same spectrum receives the light and converts the photonic energy to electrical current.”

      1
      December 1, 2019
      • David Drinkwater said:

        I’ve lived professionally in TI’s back yard for quite some time. Improving GaAs emitter and Si detector yield was a part of my job for a while. The thing I take from this is … nothing. The emitter detector part of the equation is nearly trivial. The 3D implementation and calculations are the real “it” of it. And putting it in a system small enough to fit in an iPhone is the border between science/technology and magic.

        0
        December 1, 2019
      • Gregg Thurman said:

        A 3D ToF camera paints a subject with a spectrum of light then measures the ToF of each light frequency within the emitted spectrum to create a 3D image of the subject.

        0
        December 2, 2019
  1. Gregg Thurman said:

    Are you saying that you agree that Mr. Chatterjee’s estimates are conservative?

    I agree that they are conservative (examples follow). All data sourced via estimize.com.
    FQ1/18
    WS revenue estimate: $86.750 Billion
    Actual revenue: $88.293 Billion
    FQ2/18
    WS revenue estimate: $60.991 Billion
    Actual revenue: $61.137 Billion
    FQ3/18
    WS revenue estimate: $52.368 Billion
    Actual revenue: $53.265 Billion
    FQ4/18
    WS revenue estimate: $61.492 Billion
    Actual revenue: $62.900 Billion
    FQ1/19
    WS revenue estimate: $84.071 Billion
    Actual revenue: $84.310 Billion
    FQ2/19
    WS revenue estimate: $57.554 Billion
    Actual revenue: $58.015 Billion
    FQ3/19
    WS revenue estimate: $53.314 Billion
    Actual revenue: $53.809 Billion
    FQ4/19
    WS revenue estimate: $62.725 Billion
    Actual revenue: $64.040 Billion

    Average WS margin of error 1.266% understatement.
    Average Gregg Thurman margin of error 0.595% overstatement.

    My FQ1/20 revenue estimate $90.733 Billion.

    1
    December 1, 2019

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