Apple (AAPL) Price Target Raised to $125 at UBS

UBS maintained a Buy rating on Apple (NASDAQ: AAPL) and raised its price target to $125.00 (from $115.00). The change follows a proprietary global smartphone survey. Analyst Steven Milunovich noted China demand and brand strength.

"About 40% of respondents are likely to buy an iPhone 6 in the next year. Over half of intended purchases are for the 6 Plus compared to 38% for the iPhone 6. We have modeled a 2.5-to-1 ratio favoring the iPhone 6, so a tilt toward the 6 Plus would be positive for Apple's phone ASPs and earnings. Demand in China is surprisingly high with 29% indicating they are very likely to choose the iPhone 6, more than other regions. Almost one-third of interested iPhone buyers currently own Samsung phones, foreshadowing significant share gain for Apple," said Milunovich.

"Apple enjoys the highest overall retention rate at 84% and by far the highest retention in China at twice the rate of Samsung or Xiaomi. The brand is strong with the highest Net promoter score in our study and consumer perception as the most aspirational brand with unique products albeit at high prices. In addition, over 70% of iPhone 6 buyers say they are at least somewhat likely to use Apple Pay," continued the analyst.

"We are raising our price target from $115 to $125 based on an F15E P/E multiple of 15x or 10.7x when excluding $21 net cash per share, still below the market multiple. Based on the study, iPhone 6 demand could be about 190mn units through Dec 2015, suggesting upside to our 170mn unit forecast. Also, if Apple were valued more like a subscription businesses with low churn, its market cap might be able to double," he added.

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 $108.83 yesterday.

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