Apple stock continues to hover close to all-time highs as analysts try to paint an even rosier picture than what they’ve already sketched for investors. It seems like a broken record these days: the iPhone 8 will be so spectacular that no one will care about any other smartphone again… ever.
Although no one seems to really care about what Apple is doing currently, as all eggs are being placed in the iPhone 8 basket, the company announced today that it will release its next earnings report on May 2. The report will be followed by the earnings call, which will stream online at 5 p.m. Eastern. The company has guided for $51.5 billion to $53.5 billion in sales and a gross margin of 38% to 39%, not that the March quarter even seems to matter to most analysts or even investors at this point.
Underestimating the iPhone 8?
Cowen and Company analyst Timothy Arcuri said this week that investors are greatly underestimating how big the iPhone 8 cycle will be this year. That seems hard to believe, given that analysts have excited investors so much that they’re pushing Apple stock to a new record on a regular basis these days.
Nonetheless, Arcuri told CNBC’s Squawk on the Street on Monday that the 82 million-unit consensus Wall Street has set for this year’s holiday quarter iPhone sales isn’t high enough. As countless others have noted, he explained that the iPhone installed base is 50% bigger than the base the iPhone 6 launched into, so even if the upgrade rate is far lower, the end unit number should be much bigger.
The Cowen analyst believes that there’s still “a ton of innovation” left in the iPhone and predicts a foldable iPhone by 2019.
But will people really buy a $1,000 iPhone 8?
One of the rumors about the iPhone 8 has been that it could be priced in excess of $1,000, but UBS analyst Steven Milunovich doesn’t buy it. He predicts that the 64GB anniversary iPhone will be priced between $850 and $900, which is only slightly higher than the Samsung Galaxy S8 Plus. He noted that the S8 Plus has a 6.2-inch display, while the iPhone 8 is rumored to have a 5.8-inch display. He feels that this limits how much Apple can charge for it.
He also believes that Apple is “about mainstream luxury,” so he just doesn’t feel that a $1,000 phone is likely.
A limit on upside for Apple stock?
Pacific Crest analyst Andy Hargreaves also weighed in on Apple stock today, boosting his price target to $150 from $140 per share as he found signs of strong component orders, which caused him to raise his iPhone unit estimates. Even with the price target increase, he seems to see limited room left for further upside in Apple stock.
He also warned that a strong iPhone 8 cycle may not be enough to drive Apple stock much further up from where it is now. He expects future growth to “slow substantially” and believes that corporate tax reform and a dividend increase could be needed for “significant” upside in Apple stock.
Shares of Apple stock edged upward by as much as 0.53% to $144.46 during regular trading hours on Tuesday.