Apple (AAPL) Saw a Robust Christmas/Holiday Season, iPhone 12 Momentum Bullish Into 2021 - Wedbush

Wedbush analyst Daniel Ives says the latest data is signaling a strong holiday season for Apple (NASDAQ: AAPL) as we head into 2021. Data looks bullish, especially for iPhone 12, with the latest numbers exceeding Wedbush’s “bull case scenario”.

“We believe Apple saw a robust Christmas/holiday season not just on iPhones, but also had a strong AirPods performance that will be another product tailwind heading into 2021 for Cook & Co,” Ives wrote in today’s note sent to clients.

The recent checks show that the supply chain is anticipating low-to-mid 90 million iPhone unit builds for the December quarter.

“To put this in context, in mid December we had this in the 80 million range with a stretch goal in the mid 80 million range and heading into late October we were anticipating 75 million units as the line in the sand and roughly three months ago this number was in the 65 million to 70 million range. This is roughly a 35% increase from our original and Street forecasts.

“For the March quarter we believe builds for total iPhones ticked up again another 5% over the last week and are now in the 60 million to 70 million range. For the June quarter we believe initial builds are in the low 40 million range with potentially an upward bias. We have not seen a launch uptrend such as this in a number of years for Apple and the only iPhone trajectory similar would be the iPhone 6 in 2014 based on our analysis,” he added.

The current Street consensus for iPhone sales in FY21 is 217 million units. However, Ives says we may see sales north of 240-250 million units, which would easily eclipse the previous Apple record of 231 million units sold in FY15.

“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.”

China, in particular, is expected to continue acting as a key driver behind the “Supercycle” thesis. Ives about roughly 20% of iPhone upgrades will be coming from this region over the coming year.

“We are seeing considerable strength from the China region thus far with positive trends heading into year-end and 2021. 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. With 5G now in the cards and roughly 40% of its "golden jewel" iPhone installed base not upgrading their phones in the last 3.5 years, Cook & Co. have the stage set for a supercycle 5G product release,” Ives concluded.

He reiterated an “Outperform” rating on AAPL and a price target of $160.00 per share, in addition to a bull-case scenario of $200.00.

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 $134.12 yesterday.

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