Apple Inc. (AAPL) stock touched another fresh high on Friday following another price target increase. Analysts are chomping at the bit not only because of all the iPhone 8 rumors but also the prospect of a hugely popular iPhone priced at $1,000 or above. It seemed like the rumors had rolled back the price of the iPhone 8, but the claims of even pricier models this year are back—with a vengeance.
Apple Inc. (AAPL) stock heading to $180
In a research note dated May 12, Bank of America Merrill Lynch analyst Wamsi Mohan said he boosted his price objective for Apple Inc. (AAPL) stock to a bullish $180. He noted that last year, the company’s products accounted for a massive 10% of global consumer spending and adds that Apple Inc. (AAPL) has been able to successfully drive the high end of the product categories it targets with more growth than originally expected.
For example, Macs surpassed the growth in the PC market and Apple Watch sales surpassed the revenues of many luxury watch makers, he claims. Thus, any new product categories add to the company’s significant growth, and he feels that “ignoring the shadow TAM (unannounced products) understates Apple Inc. (AAPL)’s true potential.”
He predicts that one day, Apple Inc. (AAPL) products will simplify health monitoring and interactions with healthcare professionals, and he feels that this will boost stickiness with the company’s ecosystem.
Ignoring rumored Apple products?
He pegs the total addressable market for all of the company’s products at about $550 billion for 2020, but he also feels that “close adjacencies” can be found in other markets amounting to $300 billion or $140 billion, excluding TV. He adds that this also excludes any potential addressable markets in healthcare and automotive. He estimates the premium end of the auto market at an incremental total addressable market of $700 billion in 2020 and notes that Apple Inc. (AAPL) can easily enter almost any other market it wants by acquiring another company.
Mohan also sees more room to grow and take share in smartphones, tablets, wearables and computers, as he estimates that there was about a $350 billion addressable market left last year. Among the new potential categories for the company to explore are game consoles or handheld gaming devices, cameras or camcorders, DVD or Blu-ray players, and TVs or HDTVs. He also pegs the virtual reality market alone at $30 billion in 2020.
Apple stock to receive a boost from the $1,000 iPhone 8
Goldman Sachs analyst Simona Jankowski boosted her price target for Apple Inc. (AAPL) stock from $164 to $170 in a note dated May 11. Her price target increase was driven by “the first $1,000 iPhone,” which of course is a reference to the iPhone 8. She sees significant upside in average selling prices for the iPhone and describes three conclusions regarding this year’s models.
She predicts that there will be an iPhone 8 model with 128GB of storage that will be priced at $999 and one with 256Gb of storage priced at $1,099. She also predicts that the iPhone 8 will drive well over half of the new iPhone shipments in the first four quarters of its existence. Based on these numbers she sees the potential for the average selling price to go as high as $797.
Jankowski also described the features she expects to see, including a 5.8-inch OLED display and 3D sensing. She described the display as having a height and width that’s “slightly bigger” than the iPhone 7 but still smaller than the iPhone 7 Plus. She also expects the iPhone 8 to have more than 50% more surface area than the iPhone 7 but be only 15% bigger.
She described the 3D sensing tech as creating “a three-dimensional map of the physical area surrounding the phone, enabling new applications such as facial recognition and a much more robust augmented reality (AR) experience.”
Apple Inc. (AAPL) stock rose by more than 1% to as high as $156.42 during regular trading hours on Friday.
