Wedbush's Dan Ives hikes his Apple target $20 to $220, a new market high

"Apple remains our favorite tech name."

From a note to clients that landed on my desktop Wednesday:

Our Asia supply chain checks on Apple over the last few weeks remain very firm (further slight improvement) as Cupertino is in the final stages of setting up for its iPhone 14 release in mid September with invites likely coming in the coming weeks.

We believe the initial order for 90 million iPhone 14 units out of the gates has stayed firm and will be roughly roughly flat with iPhone 13 despite the macro storm clouds. This speaks to the underlying demand story that Apple anticipates for this next iPhone release with our estimates that 240 million of 1 billion iPhone users worldwide have not upgraded their phones in over 3.5 years.

In particular we believe Apple is expecting another heavy iPhone Pro and Pro Max mix shift which is a clear positive for ASPs heading into FY23. While the base iPhone will stay at the same price we believe a $100 price increase on the iPhone 14 Pro/Pro Max is likely in store given component price increases as well as added functionality on this new release.

From a spec perspective, iPhone 14 will have enhanced camera technology (48-megapixel), while we believe the iPhone 14 Pro models will also have the innovative A16 chip as more consumers head down the Pro path. There will also possibly be some storage enhancements on both the base iPhone 14/Pro...

Services looks strong into FY2023. With Apple's services business set to be roughly $90 billion in FY23 and set to eclipse the $100 billion threshold in FY24 with this double digit growth pace showing healthy demand ahead, we believe this key revenue stream remains at the epicenter of Apple's multiple and growth story during this market storm. On a growth and EBITDA basis, we believe Apple's services business is worth alone north of $1 trillion which coupled with the flagship hardware business makes the risk/reward very compelling at current levels.

In a nutshell, we believe Apple's growth story remains well intact with clear momentum around iPhone 14 around the corner despite the shaky macro. Apple remains our favorite tech name.

Maintains Outperform rating and raises price target to $220 from $200.

My take: After several months in the lower ranks, Ives once again has pride of place in my price target spreadsheet.

7 Comments

  1. Bart Yee said:
    Just like AAPL, can’t keep Ives’ price target beach ball down for long.

    Although the rumors have been that each Pro Model will get a $100 increase, and Apple would certainly be justified from a parts, supply, inflation and Forex standpoint, it would be stunning if Apple held the line or only increased by say $50 to $1049 and $1149.

    Here’s what I expect:
    iPhone 13 mini $699

    iPhone 14 $799

    iPhone 14 Plus or Max $899 base 128gb, $999 256gb, $1199 512gb.

    iPhone 14 Pro $999-$1049 128 or 256gb, $1099-1149 256gb, $1299 512gb, $1499 1TB

    iPhone 14 Pro Max $1099-1149 128gb, $1199-1249 256gb, $1399-1449 512gb, and $1599 1TB

    No need for Apple to even approach the Z Fold 4 price of $1800 although I’ll bet there will be ads from Samsung asking why you only get “half” a screen for your money.

    6
    August 17, 2022
  2. Gregg Thurman said:
    I’ll bet there will be ads from Samsung asking why you only get “half” a screen for your money.

    It’s because I don’t want to pay twice as much for an Android device that fits uncomfortably in my pocket.

    5
    August 17, 2022
    • David Emery said:
      Or that breaks after routine use…

      4
      August 17, 2022
  3. Miguel Ancira said:
    Or the rest of the analysts can get their tips from Buffett’s latest buys….

    1
    August 17, 2022
  4. Michael Goldfeder said:
    Perhaps Apple can start an ad campaign analogizing the Samsung foldable phone to really not an innovation at all. It’s just a 2.0 variant of a “Flip Phone” with the only difference being a much higher price tag.

    1
    August 17, 2022
    • David Emery said:
      But I don’t think that’s true. Seems to me Samsung really has 2 different ‘behaviors’ here. One is a flip phone like device that contains both a small and an expanded larger screen. The other is a much larger screen that mechanically happens to fold. But in both cases, Apps have to adapt to the ‘behavior,’ and that’s substantial design complexity that needs to be justified by clear consumer-focused/consumer-adopted usage.

      4
      August 17, 2022
      • Kirk DeBernardi said:
        David E. —

        Spot on.

        Two different ‘behaviors’ in one device and the software UI engineering prowess to provide for a pleasant experience will probably prevent a folding phone from becoming any kind of mainstream device.

        Niche at best.

        More friction? Not good.

        0
        August 18, 2022

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