Is it too late to bite into shares of Apple, Inc. (NASDAQ: AAPL), which last week hit a new 52-week high? That has been the question rolling around investors’ minds amid a 10% run for AAPL stock over the past month, and a 22% gain over the past quarter.
It’s increasingly difficult to find a nice entry point in Apple stock, and that’s truer today, with shares set to rise again on a price-target upgrade from Goldman Sachs.
Goldman analyst Simona Jankowski just raised the firm’s PT on AAPL stock from $133 to $150, implying another 14% or so in upside from here. Her comments:
“Last week’s industry datapoints (e.g. from optical supplier Lumentum) suggest that the inclusion of 3D sensing functionality is increasingly likely, which could enable a robust augmented reality [AR] feature set that we believe will be a key differentiator for the 10-year anniversary iPhone. This is a significant step-up in innovation vs. the prior two product cycle, especially when viewed in conjunction with the potential significant form factor change enabled by the move to an OLED display (e.g. removal of the bezels and the home button).”
Apple shares finished Friday at $132.13 — a 2.4% gain for the week. And $150 seems like an easy target for the stock to reach.
Why AAPL Stock Can Hit $150
A combination of factors are driving the increase. Notably, the market now seems less pessimistic about the adverse impact Donald Trump’s presidency might have on tech companies, including other mega-caps like Amazon.com, Inc. (NASDAQ:AMZN) and Facebook Inc (NASDAQ:FB).
In the case of Apple, though, aside from the company’s strong first-quarter fiscal 2017 earnings last month, AAPL stock is also driven by speculation that the company’s next product cycle might be ahead of schedule.
And not only are there rumors that Apple may release its iPhone 8 earlier than its normal September launch date, the iPhone 8 — the device’s anniversary edition — may be priced “north of $1,000” and could be called the “iPhone X,” according to Fast Company.
What’s more, the design of iPhone 8 (or iPhone X) — which Fast Company said will “look something like a smooth black monolith, with few visual interruptions to its design” — is expected to encompass a drastic departure from what consumers have become accustomed to. The physical buttons on the phone’s sides are likely gone and will be replaced with metal inlays.
Apple is rumored to relocate the home button, putting it under the display. And the new device, which may finally support wireless charging, might not have the rounded edges its predecessors have had. These enhancements were reported by MacRumors, which cited a note from KCI Securities analyst Ming-Chi Kuo, who said Apple’s iPhone 8 will have a new 3D Touch module.
These potential catalysts have forced Wall Street to adjust their models, prompting several bullish calls from the likes of Bank of America, which also recently raised its price target on AAPL stock to $145 from $140.
Michael Walkley, Canaccord Genuity analyst, lifted his price target to $154 from $142, saying, “we believe Apple will extend its leading market share of the premium-tier smartphone market installed base during 2017.”
Bottom Line for AAPL Stock
If Apple was able to sell a more than 78 million phones in 2016’s holiday quarter, just imagine what it could do in this year’s holiday quarter given the feature-rich qualities the new iPhone 8 (or whatever it will be called) will have.
As such, $150 to $155 now seems like a realistic target for AAPL stock by the end of the year, representing a 14% to 18% move.
Combined with Apple’s 1.7% yield, that’s excellent value.
As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.