Apple Inc. (AAPL) has been upgraded yet again on the heels of the iPhone 7 and Apple Watch Series 2. Since Sept. 12, AAPL has gained about 11% — its best gain in years — and that matches the amount of upside Apple has left.
The latest brokerage firm bullish on Apple shares is UBS. The firm boosted Apple stock’s price target to $127 from $115. UBS’ target is slightly above the median price target of $126, which represents an 11% gain from Tuesday’s close.
UBS cited “encouraging Evidence Lab analysis of search volumes” as the reason for the upgrade. Analyst Steve Milunovich, however, doesn’t see as much demand for the iPhone 7 as for the previous generation iPhone 6. That said, Milunovich does see more demand for the iPhone 7 than the iPhone 6S, last year’s model.
Yesterday, JPMorgan analysts claimed the iPhone 7 surge isn’t sustainable, and that the excitement over AAPL stock was premature. What’s more, JPMorgan analyst Rod Hall believes the surge in demand for the new iPhone is “due to more aggressive-than-expected promos,” as all four major wireless carriers are advertising free upgrades and trade-in deals.
UBS’ Milunovich claims Verizon Communications Inc. (NYSE:VZ) isn’t seeing a “significant change” in demand for the iPhone 7, while other mobile operators and retailers are seeing large pre-order volumes on the back of the Samsung Electronics (OTCMKTS:SSNLF) Note 7 fiasco. China, however, remains a mystery.
From the note:
“We are increasing our upgrade estimate from 41% to 44%, our F17 EPS estimate to $9.30, and our target price to $127. Increased procurement could reflect demand or just timing. The UBS Asia tech team’s latest estimates show iPhone 7 procurement plans for F17 have increased from 80mn to 89mn, mainly due to 7 Plus needs,”
UBS’ per-share estimate increased from $9 previously. The firm also notes that Apple’s share price will likely take a dive before gaining into earnings.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.
