Wedbush analyst Daniel Ives believes that Apple Inc. AAPL is heading into the iPhone 15 product cycle from a position of strength. The upcoming iPhone 15 product cycle could be another trophy case moment for Cupertino, with expected units and Average Selling Prices (ASPs) that could easily surpass current Street expectations.
The Apple Analyst: Ives is raising his price target from $205 to $220 to reflect increased confidence in this upcoming iPhone cycle and reiterates Apple as an “Outperform” and Wedbush Best Ideas List name.
The Apple Thesis: Based on Ives’ analysis, approximately 250 million iPhones have not been upgraded in over 4 years, setting Apple up for a major installed base upgrade cycle heading into this anniversary 15-year release. With more Apple customers heading down the Pro path, especially in China, Ives believes ASPs could start to approach the ~$925 level for the iPhone 15 cycle, up roughly $100 in the last 18 months.
As reported previously, Apple’s Vision Pro mixed reality headset, priced at a hefty $3,499 and expected to hit the market early next year, is not expected to be a problem. Ives suggests that the headset’s capability to integrate gaming, video streaming, conferencing, and health/fitness apps across Apple’s ecosystem positions it as a revolutionary product that could potentially outpace competitors.
The iPhone 15 lineup is rumored to feature the world’s thinnest screen bezels, a “dynamic island” feature for quick access to frequently used apps, the A17 Bionic chipset, enhanced HD photography capabilities, and a switch to solid-state buttons from physical ones.
In FY24, Ives anticipates that Apple is on pace to approach $100 billion of annual services revenue growing double digits, a trajectory that is key to the valuation re-rating that he believes will continue to take place around Apple’s stock. Ives now assigns a valuation in the $1.4 trillion range to this services revenue and believes Apple’s fair valuation could be in the $3.5 trillion range with a bull case $4 trillion valuation by FY25.
Apple Price Action: Apple stock traded 0.2% higher at $178.82 in the premarket session on Wednesday.
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