Home Technology AAPL Stock Price Target Upped As Analysts Debate iPhone Price Elasticity

AAPL Stock Price Target Upped As Analysts Debate iPhone Price Elasticity

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Bookmark this page and keep checking back for the latest AAPL stock news. We’ll be providing continuing updates as news about the iPhone maker and its shares unfolds. You’ll find analysis, stock trends and more.

UPDATE 9/19/2017: AAPL stock seems to have settled into a steady range today after bouncing around in the wake of the iPhone X event. There’s no doubt that analysts are seeing dollar signs now, what with the price increases for the iPhone 8 and 8 Plus and the $1,000 iPhone X.

Will they keep buying iPhones?

A few now question whether Apple will be able to keep consumers buying its pricey phones, but one analyst has boldly raised her price target for AAPL stock because of a major trend she discovered. It seems that when the company has raised iPhone prices in the past, it actually increased demand for them—if the price increases were paired with innovation. On the other hand, one firm says the company’s weakening innovation has turned it bearish on AAPL stock for the first time ever.

But no matter what you think of the higher iPhone prices, most analysts are pointing out that this will be a key test in price elasticity for Apple’s most important product.

Morgan Stanley boosts AAPL stock price target

In a note dated Sept. 19, Morgan Stanley analyst Katy Huberty said she raised her price target for AAPL stock from $182 to $194 and reiterated her Overweight rating. She seems to be in the minority here as few analysts raised their target prices for AAPL stock following the iPhone X event, although this could change as they spend more time examining the numbers.

Huberty noted a long list of higher-than-expected prices for new Apple devices:

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Because of these higher prices, her revenue estimate for fiscal 2018 rises to $301 billion from $288 billion and now is much higher than the consensus of $263 billion. Her fiscal 2018 earnings per share estimate rises to $12.60, which is 15% higher than consensus.

Innovation-led prices increases help demand

Huberty went on to build a case for price increases on its products being a boon for Apple and not a hindrance. Because the company’s products are often seen as a sort of status symbol and people aspire to own them, it can get away with charging higher prices. She found that as iPhone prices rise, so does demand for them and cited three relatively recent examples: the iPhone 6 Plus, the iPhone 5c and SE, and the iPhone 7 Plus.

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The Morgan Stanley analyst also noted that loyalty to Apple’s products is on the rise as her April AlphaWise U.S. Smartphone Survey found that 92% of those who planned to upgrade within the next year planned to buy another iPhone. Last year, this metric stood at 86%.

iPhone price elasticity tested

While Huberty is convinced that the higher prices will raise demand for Apple’s products, others are not so sure, or they’re at least worried about supply constraints. Bank of America Merrill Lynch analyst Wamsi Mohan has a Buy rating and $180 price objective on AAPL stock, and he actually slashed 10 million units off his iPhone X estimates, citing the “relatively inelastic pricing” Apple has seen in the past. He described his view on unit numbers as “moderately more cautious,” adding that investors will probably watch for sell-through numbers to judge the new iPhones’ success.

UBS analyst Steven Milunovich also has a Buy rating and $180 target on AAPL stock, and he wrote that the company “is pushing the envelope likely in the belief that its innovation warrants higher prices.” He noted that the iPhone 8 could do well in China because the number 8 is considered lucky and it will be available in gold, while the iPhone X will not be.

Will Apple keep doing well overseas?

His UBS Evidence Lab work regarding price elasticity backs up what Huberty found as far as past trends, but with one finer point: U.S. rather than international consumers. He found that customers overseas seem to be more price-conscious than U.S. consumers.

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Because of this trend, he reduced his iPhone X mix to 35% of fiscal 2018’s shipments from the 45% he was estimating previously.

What innovation?

One key theme that has emerged as analysts weigh the price elasticity issue for the iPhone is innovation. Apple feels it can charge more for innovation, and U.S. consumers are willing to fork over the cash for it, although overseas customers might not be.

Most of Wall Street raved about the iPhone X and some of Apple’s other new products after last week’s event, but Orange Peel Investments called the iPhone X “relatively underwhelming” in a post for Seeking Alpha. The firm doesn’t believe Apple’s innovations are “as robust” as they have been previously, and for the first time ever, it now has a bearish view of AAPL stock.

In addition to what the firm feels is a lack of innovation, it also sees AAPL stock as having “finally started to grow into itself.” And finally, Orange Peel Investments believes that the overall market is about to peak, shifting overall sentiment toward the negative end of the spectrum. Such a shift could be bad for AAPL stock, of course.

AAPL stock hovered around its opening price on Tuesday, staying in the $158 to $160 range before closing bell.

PREVIOUS UPDATE 9-8-2017: AAPL stock has just experienced a one-two punch as first one article indicated that the company was having production issues over the summer and now a second suggests that the all-hallowed (note sarcasm) tenth anniversary iPhone X/ 8 will be delayed. But let’s not forget that this isn’t an eleventh-hour realization. Similar reports have been circulating for months in a sort of stutter-step pattern, with one source indicating that there were problems, followed by another source saying that the problems were resolved.

Apple AAPL Stock

AAPL stock shaken by two new iPhone 8 reports

The Wall Street Journal reported about the summer production issues on Thursday, and AAPL stock pulled back a bit, but then Rosenblatt analysts issued their own report about iPhone 8 production problems today. That second report served as confirmation that this long-time specter that’s been haunting production of Apple’s tenth anniversary iPhone model may actually be happening. As a result, AAPL stock took off immediately at the open and started falling, this time at a faster pace.

The company has invited the media to an event on Tuesday (read this to find out how to watch the live stream), and it’s widely expected that it will reveal the iPhone 8, iPhone 7s and 7s Plus, Series 3 Apple Watch, and other new gadgets. However, it remains to be seen whether any of it will be enough to satisfy Wall Street’s unquenchable thirst for a return to the glory days of AAPL stock.

iPhone 8 will be delayed: Rosenblatt

Rosenblatt analyst Jun Zhang said in a report today that Apple’s suppliers had some serious production problems over the summer. This time, he said the issue is the metal frame for the iPhone 8. This is interesting because the previous reports about production problems have pointed to other components. The Touch ID fingerprint sensor has been a favorite source of blame for problems with the iPhone 8, and some have even suggested that there might not be a fingerprint sensor on the OLED model.

The analyst still expects the iPhone 8 to be revealed on Tuesday, but he doesn’t expect it to ship on time. Instead, Zhang predicts that shipping will be delayed to October. He warned that this delay could give the Galaxy Note 8 and Huawei Mate 10 a chance to attract buyers before the iPhone 8 lands on the market.

The analyst was reiterating what The Wall Street Journal said on Thursday, but with a bit of a twist. The Journal also said that the tenth anniversary iPhone model is also expected to be delayed, but its sources stated that Apple’s manufacturing partners were having trouble with the new OLED display, which was hard to assemble with the Touch ID sensors.

Apple Monitor was better than seasonal in August

Drexel Hamilton analyst Brian White also released the preliminary results from his Apple Monitor, which captures the monthly sales of Apple’s key Taiwanese suppliers. Most of the companies in his Monitor have released their August sales, and they were better than what usual seasonality has been in the past, with a 14% to 15% month-over-month increase. The average is an 8% increase over the last 12 years and a 10% increase over the last five. White also notes that this increase is much better than the 5% month-over-month increase he recorded in the year of the iPhone 6 Plus, which had yield problems.

One thing that should be noted here is that Apple has long been believed to be planning to release three iPhone models this year. As a result, it should come as no surprise that the company’s suppliers have enjoyed a better-than-seasonal summer for production orders. After all, Zhang said in his report that Apple’s suppliers probably will not be affected by the delayed launch of the iPhone 8 because the company keeps pulling in components on schedule, so White’s Apple Monitor seems to corroborate that.

White still expects AAPL stock not only to benefit from the iPhone X cycle but also the company’s capital distribution plans, “attractive valuation and potential new innovations.” He expects AAPL stock to extend past the iPhone event on Tuesday and continues to see “attractive upside potential” up to his $208 price target.

AAPL stock slipped by about 1% in early trading on Friday, falling as low as $159.30.

UPDATE 8-31-2017: AAPL stock is continuing the tremendous tear it’s been on for most of this year as the expected reveal date for the iPhone 8 approaches. The fact that the world expects a tenth anniversary iPhone model this year has made it an extraordinary one for the company’s stock.

iPhone 8 has made this no ordinary year

There’s no denying that the page for 2017 will have to be ripped right out of the history books when considering how iPhone launches affect Apple’s stock price in the future. This year is no ordinary year, even if Apple disappoints and reveals nothing but an iterative update or the iPhone.

If that happens, AAPL stock will take a tremendous plunge, the likes of which we haven’t seen in a long time, as the downtrend will be just as exaggerated as the uptrend has been in the months leading up to the next iPhone announcement. Indeed, there’s a good reason Apple is seen as a sort of safe haven stock when the broader stock market enters correction territory.

But even if Apple does reveal that tenth anniversary iPhone model everyone is expecting, there’s still a great risk that AAPL stock will pull back. That’s based on the fact that the shares do tend to rise before an iPhone announcement and fall right after, generally speaking. And in the spirit of “what goes up must come down,” there is a risk that the tumble will be exaggerated, just like the increase this year has been.

Tim Cook unloads AAPL stock

Perhaps no one knows this risk better than Apple CEO Tim Cook, who has just unloaded a large chunk of his shares. A regulatory filing with the Securities and Exchange Commission reveals that Cook sold all of the AAPL stock he received as a performance-related bonus last week, amounting to sales of $43 million worth of shares. Of note, he basically lost over half of his shares to taxes on that sale. In contrast, Warren Buffet told CNBC’s Squawk Alley this week that he has yet to sell a single share of the iPhone maker.

According to Bloomberg data, this is only the second time in five years that he has sold all of the shares he netted in his annual stock award. On the surface, it may seem like an odd time for him to sell stock in his company because most are expecting the iPhone 8 to open a new chapter in the company’s product and stock histories. After all, why sell shares if the company’s stock is about to vault higher on the back of the so-called “iPhone the Great”?

And here comes the “but”

According to Bernstein analysts, over the last five years, AAPL stock climbed more than 16% on average in the six months before an iPhone reveal and then climbed another 4% on average in the six months after. So clearly, it’s better to sell right before the reveal because the timing avoids the risk of a huge decline and either cashes out before the stock stagnates or takes advantage of a big run-up.

However, I’d like to point out that the last standout year for the stock was 2014 when the iPhone 6 was unveiled. This is the same cycle most analysts feel is the closest comparison for the iPhone 8 cycle this year because Wall Street and consumers were whipped into a frenzy by the prospect of an iPhone that finally got a bigger display.

AAPL stock climbed 21% going into that announcement and another 25% after it because it was clear that the bigger display was a huge hit with consumers. If the shares follow that pattern, Cook could be leaving quite a lot of money on the table. However, the stock plunged 43% after the iPhone 5 reveal in 2012, in part because sentiment about the iPhone 5s was dreadful going into the reveal. Additionally, Wall Street was talking more and more about whether consumers were over the company that made the smartphone hip.

Too high too fast?

But now consider this: the stock has climbed so high so fast that some firms are finding their target prices underwater already. Barclays has a $146 price target on Apple, but it’s not bold enough to downgrade the stock, especially going into the huge iPhone 8 reveal. The firm maintains its Equal Weight rating on the shares.

It’s also important to note that Cook’s share sales were part of his predetermined trading plan that allows executives to sell shares without the stench of insider trading. Such plans require executives to state specific prices, amounts and dates and then qualify their reasoning, so Cook may have planned to sell the shares he received as a bonus right after receiving them if they were at a certain price. Or he may be aiming for August to capture the pre-iPhone announcement time frame. We just have no way of knowing.

Bloomberg also revealed that he sold $65 million worth of AAPL stock last year around the same time, so this could simply be the new normal for him.


There’s no denying that every iPhone release has an impact on AAPL stock, and there are certain patterns the shares follow around the announcement and availability dates. With this year marking the 10-year anniversary of the iPhone, Apple is expected to release three new models, including the special edition iPhone 8. Due to this, AAPL stock will likely behave a bit differently this year, but even so, this pattern will probably still play a role in what the shares do this year.

Ten years of AAPL stock history

One thing that should be noted when tracking AAPL stock before and after an iPhone announcement is that the company gradually shifted the launch dates over the early years. After revealing the original iPhone in January 2007, it unveiled the iPhone 3G in June 2008. The iPhone reveals remained in June until the iPhone 4s, which was announced in October 2011. With the iPhone 5, the announcements shifted to September, where they have since remained. This year it’s probably still too early to say, but most generally expect the iPhone 7s and 7s Plus and the iPhone 8 to be revealed in September.

The first iPhone was revealed to the world in January 2007 after long-running rumors, and it was released on June 29, 2007. Since then, AAPL stock is up some 600% on a split-adjusted basis, and its chart shows a steady upward march with a couple deep valleys when zoomed out to 10 years of history.

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elcodigodebarras / Pixabay

The two main valleys that you see were in 2013 and 2016, as AAPL stock started dropping off in late 2012 after the release of the iPhone 5 and then in August 2015 ahead of the iPhone 6s and 6s Plus. However, 2016 was really more of a lackluster year ahead of huge gains this year in anticipation of the tenth anniversary iPhone 8.

What happens to AAPL stock leading up to a new iPhone?

In the days leading up to the original iPhone release, AAPL stock was on a steady decline during the tail end of the holiday shopping period. Things were more even the following year with the iPhone 3G reveal in June 2008, but with the iPhone 3GS the next year, AAPL stock ticked higher about 10 days before the announcement.

Ahead of the iPhone 4’s release in 2010, Apple stock bounced around, although it was range-bound with brief touches above the split-adjusted $100 a share mark. However, the shares were trading higher more than 30 days before the announcement. Recall that Apple split its stock in 2014, handing out seven shares for every one share.

The iPhone 4s was revealed in October 2011, and AAPL stock climbed between 30 and 20 days of the announcement, although it fell for roughly 10 days before the big reveal. With the iPhone 5 in 2012, Apple shares ticked higher leading up to the announcement. The year of the iPhone 5s, they began to decline about a week into the month of the announcement and continued to tick gradually lower until the day of the announcement.

The iPhone 6 and 6 Plus were released in 2014, and this is the year most analysts are comparing this year with. Anticipation was running high then because of the constant reports that Apple was finally entering the phablet market and even giving the screen size of the standard iPhone a bump up. There was a rather steep increase in AAPL stock through much of 2014 leading up to the two iPhones’ release.

Then we get into 2016, which as was already mentioned, was somewhat lackluster for AAPL stock. The shares gradually trended lower before bottoming out in May. In the 30 days leading up to the announcement, shares trended higher but suddenly turned lower just ahead of the reveal.

What happens after an iPhone reveal?

Kensho data reveals that AAPL stock declines 80% of the time the day a new iPhone model is revealed, which tracks with the “buy on the rumor, sell on the news” trading philosophy. Last year when the iPhone 7 and 7 Plus were unveiled, the shares bucked this trend and ticked nearly half a percent higher. Not only did AAPL stock go against this trend, but it also ran against another one.

Seventy percent of the time, AAPL stock falls the day after the event. However, last year, the shares rose continued to climb for several days afterward before coming unglued. The only other times there was a major drop between the day of an announcement and the day after were the iPhone 5s and the original iPhone.

Why the iPhone 7 had an unusual effect on AAPL stock

The problem last year was probably that management revealed that they wouldn’t announce first-weekend iPhone sales. Instead, they rested on vague statements, like their expectation that they would sell out of the iPhone 7. They also said that they expected the iPhone 7 and 7 Plus to be “incredibly popular.”

Because the decision not to reveal first-weekend sales for the iPhone 7 line-up proved to be so unpopular, one can hope that Tim Cook and Company will not make the same mistake again. Wall Street began to wonder whether the iPhone had peaked in popularity, especially given that unit numbers declined for the first time during the iPhone 7 cycle. Of course, if the iPhone 8 sells so well during the first weekend, one would think Apple management would proudly trumpet that before the whole world.

iPhone 8 has already been driving AAPL stock

Although most years, AAPL stock has been driven by anticipation for the next iPhone cycle, this year, we’re seeing a much greater level of anticipation because of the high bar that’s been set for the iPhone 8. The tenth anniversary model is expected to be the first which sports an OLED display, but that’s not the only thing that has analysts practically salivating at the thought of it.

Many are also expecting some amazing augmented reality feature, especially since the reveal of ARKit in iOS 11. There’s debate about whether the fingerprint sensor on the iPhone 8 will be embedded in the display, placed on the back, or simply left out entirely in favor of better biometric technology. So we’ll just have to wait and see what the company reveals this year and what the ultimate impact will be on AAPL stock, but there’s no doubt that it’s already been driving the tremendous climb we’ve seen this year.

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