Apple, China Mobile Deal Sparks Strong Buy Ratings For iPhone Maker

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Traveling abroad, it’s not rare to hear Siri’s voice on the streets of London, the familiar iPhone ringtone in a restaurant in Japan, or the fond sound of an iPhone alarm beeping in Mexico. Now, the latest deal with China Mobile Ltd. (ADR) (NYSE:CHL) (HKG:0941) will solidify Apple Inc. (NASDAQ:AAPL)’s global presence in China. As of January 17th 2014 the Chinese state-owned telecommunications company, China Mobile, will be officially selling Apple Inc. (NASDAQ:AAPL)’s iPhone, in addition to running the phone on its network. Needless to say, investors are buzzing about the financial repercussions and analysts are recommending BUY Apple Inc. (NASDAQ:AAPL).

Apple’s growth potential

Goldman Sachs analyst Bill Shope is very eager to recommend BUY Apple Inc. (NASDAQ:AAPL), recognizing the huge growth potential for the company. Bill said, “This deal gives Apple Inc. (NASDAQ:AAPL) access to growing smartphone installed base at China Mobile, which currently stands at 170  million 3G customers. We believe this could add another 15-20 million units to Apple Inc. (NASDAQ:AAPL)’s annual iPhone shipments, and potentially boost CY 2014E EPS by more than 5%.” Bill also points out that during Apple Inc. (NASDAQ:AAPL)’s strong December quarter revenue guidance probably included very little from China Mobile Ltd. (ADR) (NYSE:CHL) (HKG:0941), foreshadowing a huge jump in revenue potential once China Mobile sales are factored in come mid-January. Bill is ranked 215 out of 2318 analysts and has an average +2.6% return over S&P-500.

Tavis McCourt also reiterated a Strong BUY rating and raised his price target from $650 to $700. “Just last week during the launch of its 4G TD-LTE network, China Mobile’s CEO Li Yue said he expects China Mobile Ltd. (ADR) (NYSE:CHL) (HKG:0941) to sell 220 million smartphones in 2014, up from 155 million in 2013, 100 million (~45%) of which are expected to be 4G TD-LTE handsets, such as the iPhone 5s and 5c…but given the lack of details around pricing/promotion, we are currently forecasting 10 million incremental iPhones sold on China Mobile’s network calendar 2014.” Tavis is ranked 521 out of 2318 analysts and has a 57% success rate of recommended stocks.

Increase in iPhone sales

And analyst Aaron Rakers also agrees with Tavis’s 10 million projection, recommending BUY Apple Inc. (NASDAQ:AAPL) as well. “We are not changing our forward estimates; however, our model leaves us to think about the potential for up to +10M incremental iPhone sales to materialize into the March 2014 quarter.” Aaron is ranked 430 out of 2318 analysts and has a +2.7% average return over S&P-500.

Even analyst Ben Reitzes recommends BUY Apple Inc. (NASDAQ:AAPL), despite feeling that the deal might have been overhyped. Ben felt that, “the China Mobile possibility might have been overhyped going into today’s event. Nevertheless, we have expected a deal to have a gradual phase in period yielding millions of units in channel fill in C1H14, which still seems quite likely at this point.” Ben is ranked 333 out of 2318 analysts and has a 56% success rate of recommended stocks.

These top analysts have voiced their opinions and it appears BUY Apple Inc. (NASDAQ:AAPL) is the overwhelming call to action. However, before you make a move, be sure to review each analysts’ recommendation history and download TipRanks to start making informed financial decisions today.

By: TipRanks

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