With Apple at $315, Wells Fargo sticks with $245 target

From a note to client by analyst Aaron Rakers that landed on my desktop Wednesday:

Wells Fargo Analysis Supports High-60M Total 4Q19 iPhone Ship: As shown in the charts on the following pages, we have found a high historical correlation (R2 = 0.94) with Apple’s iPhone shipments, excluding China. If we were to apply this historical correlation for 4Q19, we would be left to estimate implied iPhone shipment (ex-China) to increase in the low-single digit range y/y, or implying the high-50 million range – we would note this is down from our prior analysis using the historical contribution of October + November data that suggested the low-60M range. Coupled with our prior analysis of internal China smartphone registrations (link to note; pgs. 15-16), we think this data could leave us to estimate total 4Q19 shipments implied in the high-60M unit range vs. our current estimate of 68.9M (street: 67.5M).

Maintains Market Perform rating and (soggy) $245 price target.

Cue the charts:

apple wells fargo 245

apple wells fargo 245Click to enlarge. 

My take: Rakers is still counting iPhones.


  1. Gregg Thurman said:

    In the near term iPhones remain an important component of Apple’s business. Commencing with FY2021 not so much. Obviously Rakers isn’t looking far into the future. Does myopia come to mind?

    January 15, 2020
  2. Gregg Thurman said:

    Is that Raker stuck in the Brea tar pits?

    January 15, 2020
  3. Fred Stein said:

    He’s driving by looking in the rear view mirror.

    Historical correlations based on iPhone sales says little about future multi-year cash flow, which should be the primary basis for a PT. The second most important PT driver in multiple expansion and the factors driving that, also not mentioned.

    January 15, 2020
    • David Emery said:

      Furthermore, his most recent data is suspect, given Apple is no longer disclosing phone sales numbers.

      I still remember high school physics and calculating error ranges, particularly when you started getting questionable data…

      January 15, 2020
  4. Aaron Belich said:

    Le sigh…

    I’m really excited for whatever Apple reports and DED’s next article smashing these terrible analyst’s theories into the dust of history.

    January 15, 2020
  5. Kirk DeBernardi said:

    Poor bastards. They take the easy way out by continuing to primarily worry about the bean count of iPhones. Sad they can’t see the forest for the hill of beans.

    I wish someone of their ilk would dig a bit deeper into the psyche of what’s really going on. At least consider this in the mix — what I think is best referred to as the “Apple Trifecta” — iPhone.  WATCH. AirPods.

    While already mentioned on this blog as a force to be reckoned with, most observers don’t adequately consider the full “moat” momentum this carries for Apple’s future.

    Three devices holding hands in a unified and harmonious system that’s utilized for most things, most anywhere and at most anytime. A big chunk of a life can fit into this trifecta.

    Who has a better designed, more utilized, more appreciated, more convenient and more personal life-systems implementation than this?




    (I’ll wait here, counting my beans.)

    January 16, 2020

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