Analyst Daniel Ives writes from Asia, where he’s touring Apple’s supply chain.
From a note to clients that landed on my desktop Monday:
Our recent checks over the last week around iPhone 11 units heading into the March quarter look robust and coupled with “jaw dropping” AirPods momentum should lead to clear upside in the upcoming FY1Q/Dec. with strong March guidance set to be announced after the bell on January 28th.
As we are currently on our 10 day Asia trip gathering more data points around the impending 5G super cycle as well as other technology trends for the next 12 to 18 months, all indications are that iPhone 11 strength appears to have discernible strength both in the US and China as installed base demand continues to look healthy into the March/June quarters with the drum-roll into the highly anticipated 5G upgrade cycle in September.
China iPhone demand appears steady (and continues to see an uptick) despite the noise and remains one of the linchpins of success for Cupertino around the iPhone 11 upgrade cycle with this smartphone release unleashing a new stage of demand for Apple in this key region. With the Phase 1 deal signing on the horizon this week, we continue to believe the biggest risk around a China tariff disruption is now in the rear view mirror as shares of Apple now start to get the valuation deserved in our opinion with the 5G super cycle and $50 billion+ services business now finally more fully appreciated by the Street.
Maintains Outperform rating and $350 price target.
My take: Here’s a measure of how aggressively Apple analysts have been playing catch-up: In the space of three weeks, Ives’ $350 has gone from a Street-high first place to a four-way tie for fourth.