Apple Inc. (NASDAQ:AAPL) stock has plenty of fans on Wall Street and Main Street, but today Wall Street is using its bully pulpit to make its voice heard. Top research firms Jefferies and Cantor Fitzgerald both increased their AAPL stock price targets, albeit for different reasons.
Apple, which began as a consumer electronics company but eventually made game-changing progress in the media and entertainment industries as well, continues to expand its already-vast scope. The company is reportedly planning to launch an electric car by 2020 in a move that pits AAPL against fellow tech favorites Tesla Motors Inc (NASDAQ:TSLA) and Google Inc (NASDAQ:GOOG, NASDAQ:GOOGL).
AAPL stock is up nearly 70% in the last year alone as a 7:1 stock split made shares more affordable for individual investors and what is now a nine-quarter streak of beating earnings estimates fueled the rally.
Catalysts: China iPhone Demand, Apple TV Service
Jefferies increased its price target on AAPL stock from $124 to $130, citing what it expects to be blowout Chinese demand for Apple’s iPhone 6 series. Jefferies’ Sundeep Bajikar expects Apple’s second-quarter earnings per share to again top consensus estimates — by 10% or more, no less — as iPhone shipments clock in at 60 million units. The average analyst estimates call for iPhone sales of 52 million units in the second quarter.
Cantor Fitzgerald is far more bullish on AAPL stock, but not because of the iPhone. Instead, analyst Brian White sees Apple’s increased focus on TV as the next catalyst for shares. He reiterated his “buy” rating on shares and gives AAPL stock a $160 price target.
“Given Apple’s growing TV ambitions over the past few years, combined with the watershed announcement in January by DISH Network Corp (NASDAQ:DISH) to launch Sling TV and Apple’s announcement last week to offering HBO NOW in April, we believe an Apple TV streaming service is ready to become a reality as the Wall Street Journal article suggests.
In our view, Apple is paving the way for grander ambitions in the TV market as we believe ordering channels on an a la carte basis with HBO NOW, or in smaller bundles through a streaming TV service, has the potential to help this process along.”
While the $160 price target — which represents a 26% gain from AAPL stock’s closing price yesterday — may seem ambitious, Apple has proven its ability to move into new areas and transform them entirely, with media being the prime example. The iTunes service transformed the way we shop for and consume music, books, and TV — with its new internet TV service set to launch this fall, Apple’s transforming TV again.
Given Apple’s ability and willingness to develop disruptive technologies in years past, I wouldn’t be shocked if the AAPL stock price met that $160 target sooner rather than later.
As of this writing John Divine owns shares of AAPL, GOOG and GOOGL stock. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
