Wedbush Bullish on Apple (AAPL) Ahead of Black Friday, Sees Big Year for AirPod Pro
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Wedbush analyst Daniel Ives says they’re witnessing solid demand for Apple's (NASDAQ: AAPL) AirPods Pro ahead of the Black Friday shopping frenzy.
Accordingly, he estimates that Apple may sell over 90 million AirPods units in this year which should rise to 115 million next year, given that a new version will be unveiled in April/May. Only in December, Ives projects sales to hit 18 million AirPods that will result in this product being crowned as “a clear star of Black Friday and holiday season.”
“While AirPods today are on a trajectory to represent 5%+ of overall revenues, this product category continues to speak to the unparalleled flywheel that Cook and Cupertino have with 950 million iPhones worldwide under its belt and 1.4 billion active devices to tap into worldwide and thus further monetize through products/services as we continue to see with the Apple Watch as well,” Ives wrote in today’s note.
“We also expect price cuts on the older AirPods versions at various retail locations starting on Black Friday and especially on Amazon as we saw price points on the latest AirPods Pro (retail $249) were cut down to $190 and will likely be lower on Friday morning in the $170 range.”
As far as iPhone demand is concerned, the demand in Asia, as well as in the States, has been very high.
“In the US we are seeing "a clear tick up" for demand around the iPhone 12 Pro versions with the 6.1-inch model the star of the show so far with carrier trade-ins/promotions catalyzing upgrades. The Pro Max model is also seeing very strong demand out of the gates which bodes well for ASPs heading into FY21 for Apple on the iPhone 12. For the key China region, demand remains very healthy with strong pent up demand for upgrades heading into holiday season for this latest iPhone 12 5G, which we would characterize as the strongest product cycle for Cook & Co. since the iPhone 6 in 2014.”
Ives reiterates his “supercycle” thesis on iPhone 12. He notes that supply chain is estimating for order of 80 million 12s in the initial launch period.
“Heading into late October we were anticipating 75 million units as the line in the sand and
roughly eight weeks ago this number was in the 65 million to 70 million range. We believe pre-orders tracked more than 2x its predecessor iPhone 11 thus far and is a robust start out of the gates for Cupertino on this flagship supercycle product. 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 Apple with a major holiday season on the horizon,” Ives, who rates AAPL as “Outperform” with a price target at $150.00, concludes.
Shares of Apple closed at $114.95 yesterday.
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