Apple (AAPL) PT Raised to $140 at Canaccord Genuity
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Canaccord Genuity analyst T. Michael Walkley reiterated a Buy rating and raised estimates and his price target on Apple (NASDAQ: AAPL) to $140.00 (from $120.00) as their survey indicates strong initial iPhone 7 demand.
Walkley commented, " the new iPhone 7 products. Between the aggressive U.S. carrier promotions, favorable premium tier competitive environment due to the Galaxy Note 7 battery issues, and stronger than anticipated initial consumer demand, we believe initial replacement sales for the iPhone 7 are better than our expectations, leading us to slightly increase our estimates. We believe the iPhone 6 and iPhone 6s products enabled Apple to materially increase its market share and installed base of the premium tier smartphone market. We believe these trends resulted in the iPhone installed base growing to over 500M exiting C2015 with overall connected Apple devices exceeding 1B users. This impressive installed base should drive strong future iPhone replacement sales and earnings, as well as cash flow generation to fund strong longterm capital returns programs of $250B through F2018. With the iPhone 7 off to a strong start, we anticipate improving replacement sales versus the 6S and a return to iPhone unit growth in F2017. However, we anticipate a stronger upgrade cycle in F2018 versus our modest expectations for the iPhone 7, resulting in us introducing our 2018 estimates and increasing our price target to $140."
He added, " We anticipate improved replacement sales following the iPhone 7 launch and estimate 28.4% of iPhone customers will upgrade to an iPhone 7 versus our estimate of 27.0% upgrading to the 6S. This results in us increasing our F2017 iPhone estimates from 221M to 226M units. For the 10-year anniversary iPhone likely to be launched in September 2017 and called the iPhone 8, we believe a new OLED iPhone will drive a stronger replacement cycle than the iPhone 7. We anticipate 30.5% of iPhone consumers will upgrade to this new iPhone, and we are introducing our F2018 iPhone estimate of 246M units."
The firm is increasing F2016/F2017 EPS estimates from $8.24/$8.87 to $8.29/$8.93. They are also introducing F2018 EPS estimate of $10.12.
Shares of Apple closed at $115.57 yesterday.
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Related EntitiesEarnings, Canaccord Genuity
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