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Apple Ecosystem Will Keep on Blooming, Says Top Analyst

Apple (AAPL) might have a new pared back share price sitting alongside its ticker, but the newly split stock has set off in similar fashion to its previously bulkier self – by posting more gains. The world’s largest company by market cap is on its way to doubling its share price in 2020, with the stock now trading at an 83% premium from where it began the new decade.

Canaccord Genuity analyst Michael Walkley expects Apple’s upward momentum to continue. The 5-star analyst reiterated a Buy on the shares, and “introduced” his new $145 price target. There’s upside of 10% from current levels. (To watch Walkley’s track record, click here)

Walkley’s argument for continued confidence in the Apple story is concise and clear. The 5-star analyst said, “With $81B in net cash, Apple has a strong balance sheet to continue to invest and support long-term growth, pay handsome dividends and reduce the share count to drive sustained EPS growth. We believe 5G will drive a strong upgrade cycle combined with ongoing strong demand for other products and sustained double-digit growth for services driving margin expansion.”

As Walkley highlighted, Apple right now is about the 5G opportunity, namely the upcoming launch of its first 5G enabled handset – the iPhone 12. Although the flagship product’s release date has been postponed (possibly to begin a staggered launch in mid-October), Walkley estimates the new “upgrade cycle” will result in 300 million to 400 million current iPhone users upgrading to a new 5G iPhone over the next 2 years, therefore, “driving strong EPS growth.”

However, that’s not the whole story. Working in Apple’s favor is its “ecosystem approach,” with the current WFH trend pushing higher growth for Macs and iPads. Additionally, with an “installed base that exceeds 1.6B devices globally,” Walkley expects the “higher-margin services revenue growth to outpace total company growth.” Walkley estimates revenue in the Services segment will grow from $55.5 billion in C2020 to $76 billion in C2022.

Overall, Apple still has Wall Street’s support, although not to the same degree of unwavering confidence it is accustomed to. A Moderate Buy rating is based on 25 Buys, 7 Holds and 2 Sells. With an average price target of $117.28, the analysts expect shares to decline by ~10% over the next 12 months. (See Apple stock-price forecast on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Marty Shtrubel
Marty Shtrubel was born in the UK, raised in Israel, and then headed back to London, where he made music and pursued a career in sound recording. After a move back to Tel Aviv, he set off on a new path and now works as a financial blogger at TipRanks.

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