Apple (AAPL) PT Raised to $125 at RBC Capital as Survey Points to ASP Upside

September 22, 2016 6:33 AM EDT
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RBC Capital analyst Amit Daryanani bumped his price target on Outperform-rated Apple (NASDAQ: AAPL) to $125.00 (from $120.00) results of >6,000 individual iPhone 7 survey which showed improved mix and prices increases for the Plus model that should drive ASP upside.

Key points from the survey included:

1) Mix shift toward the 5.5” model could drive substantial ASP upside: 46% of respondents plan to buy the larger form factor 5.5” iPhone (across 6S+ and 7+ models), up from 38% a year ago,

2) Mid-Tier Memory Remains Attractive: >50% of consumers intend to purchase the mid-tier memory model (vs. 55% last year), given the increased memory configurations we think this is positive and better than feared,

3) Our survey suggests there could be stability in the iPhone replacement cycle (or at minimum it will elongate at a slower pace) and

4) Seeing steady uptick in ancillary products and services (~17% intend to purchase Watch vs. 13% LY, Apple Pay usage at 24% vs. 16% post initial launch).

"Net/Net – We think ASPs could surprise investors on the upside due to both increased preference for iPhone 7+ and $20 higher ASP this year vs. last generation," the analyst commented. "Hence, we have slightly adjusted our forward estimates to reflect ASP ($8-10 increases) tailwinds from mix shift."

The firm's Sept-qtr revenue/EPS estimates are increased to $47.3b/$1.68, up from $46.9B/$1.66 (Street at $46.8B/$1.66). For Dec-qtr our estimates move to $78.7B/$3.34, up from $78.0B/$3.29 and reflect extra week benefits (Street at $74.0/$3.15).

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $113.55 yesterday.

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