Apple (AAPL) Could Benefit from Rising Phone Upgrade Rates, Says BTIG

Apple (NASDAQ: AAPL) could benefit from rising phone upgrade rates, said BTIG analyst Walter Piecyk.

"Apple's earnings beat and solid guidance was driven by iPhone upside that the company claims was geographically broadly based. This should be enough to mitigate the near term concerns of investors that are interested in investing ahead of the new products that Tim Cook has promised but were previously hesitant to own the stock through what was expected to be tough March and June Quarters," said Piecyk.

"We think the risk of earnings misses might be further mitigated by a possible increase in phone upgrade rates at US wireless operators, which are still the largest driver of iPhone sales. The change in upgrade policies at US wireless operators that we highlighted in our downgrade two years ago have now run their course and we believe new leasing programs will stimulate more frequent upgrades as long as Apple can deliver products that interest the customer," he continued. "In fact, in Q1, AT&T’s replacement rate hit a new low of 6.5% from 7.0% in the prior two years and the Q1 peak of over 9.0% in 2011. Verizon also just reported a 6.5% upgrade rate, down from 8% two years ago. However, we believe that Q1 could effectively mark the end of the impact of these policy changes on upgrade rates."

BTIG has a Buy rating on Apple with a modified price target of $600.00 (from $552.00).

http://Read more: http://www.btigresearch.com/2014/04/24/apple-could-benefit-from-rising-phone-upgrade-rates-in-the-united-states/#ixzz2zophBw7U

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 $524.75 yesterday.

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