This is Apple's (AAPL) most important product cycle since the iPhone 6 in 2014 - Wedbush

Wedbush's analyst Daniel Ives believes tomorrow's Apple (NASDAQ: AAPL) event will mark the beginning of the company's most important product cycle since the iPhone 6 in 2014.

Apple’s officials are due to unveil its iPhone 12 product lineup virtually on Tuesday, and therefore start the iPhone 5G supercycle. Ives expects the following iPhone models to be presented:

1) 5.4-inch OLED display starting at $699,

2) 6.1-inch OLED display starting at $799,

3) 6.1-inch iPhone Pro OLED display starting at $999, and

4) 6.7-inch OLED display iPhone Pro Max starting at $1,099.

“While all four models will have 5G, from a spec perspective the Pro versions are expected to have LIDAR sensor technology (for AR capabilities/ apps), enhanced rear camera technology, and 4x/5x optical zoom. Preorders will kick off in a few weeks with two of the models likely shipping in late October and the others in the mid-late November timeframe. In particular we are seeing Apple and its Asian suppliers anticipate stepped-up demand for the larger 6.7-inch model which is raising the overall iPhone 12 expectations heading into this "once in a decade" potential launch,” Ives wrote in a note to clients sent yesterday.

Wedbush’s analyst expects that the US version of the phone will come with mmWave technology, which could be a “game-changer” as “more infrastructure, technology, and apps are built around this transformational 5G highway over the coming years”.

“We continue to believe the line in the sand a few months ago was between 65 million to 70 million 5G iPhone 12 units and now has moved into the 75 million + range with 80 million a stretch goal. Importantly, with our estimation that 350 million of 950 million iPhones worldwide are currently in the window of an upgrade opportunity, we believe this will translate into an unprecedented upgrade cycle for Cook & Co,” Ives wrote.

On China, Ives expects that roughly 20% of iPhone upgrades will be coming from this region over the coming year.

“We are seeing considerable strength from the China region over the last few months (should be a source of relative strength in the September quarter) with positive trends heading into the all-important holiday timeframe. Despite the noise, based on our recent discussions with contacts within the Beltway we strongly believe the WeChat ban will not negatively impact or disrupt Apple's iPhone ecosystem within the key China market. In a nutshell, while services growth remains the key to the Apple re-rating story over the past six months, the hearts and lungs of the Apple growth story are built around iPhone installed base upgrades”.

It is estimated that about 40% of its "golden jewel" iPhone installed base hasn’t upgraded their phones in the last 3.5 years. Hence, Ives believes that Apple is likely entering a supercycle 5G product release which should drive shares further. Finally, he reiterates that Apple remains the bank’s favorite 5G play in the next year.

Ives rates AAPL as “Outperform” with a $150.00 price target.

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 $120.26 yesterday.

You May Also Be Interested In

• KeyBanc Reiterates Underweight Rating on Apple (AAPL)
• JD.com (JD) Reiterated at Buy by Benchmark Amid Earnings Recovery
• Jefferies on Five Below (FIVE): 'Our latest channel checks reinforce our view that FIVE's momentum extends well beyond viral Squish trends'