Next week, the annual Black Friday shopping extravaganza will take place. Heading into the event, Wedbush analyst Daniel Ives thinks Apple (AAPL) has a problem on its hands, albeit one which is a positive indicator.
The analyst estimates that current demand is “outstripping” supply by ~15%, with delivery times for the iPhone 13 Pro lengthening.
“Despite the chip shortage and Rubik's Cube logistics that Apple (and every other technology, auto, and retail vendor) is dealing with, we are seeing tremendous demand trends both in the US and China for iPhone 13 which is a positive sign that Apple could exceed selling 80 million iPhone units in the quarter with stronger Pro versions driving higher ASPs,” Ives opined.
According to Ives’ analysis, the chip issues have resulted in 10 million less available units, however, between Black Friday and Christmas, the analyst thinks Apple is on track to sell ~40 million iPhones which would amount to a new holiday season record for the tech giant.
In fact, heading into 2022, Ives believes investors are underestimating the “pent-up demand” for Apple’s flagship product. Over the past 3.5 years, there are still roughly 250 million of the 975 million iPhone owners worldwide who have yet to upgrade their models and Ives views the supply chain issues as “nothing more than a speed bump on a multi-year supercycle iPhone 12/13 that continues to play out.”
iPhones aside, the analyst also expects the redesigned AirPods 3 to put in a strong holiday performance, anticipating the company will ship almost 100 million AirPod units.
For FY22, the AirPods are now on course to represent 5%+ of overall revenues, and the 5-star analyst believes the product is a signifier of the “unparalleled flywheel that Cook and Cupertino have with 975 million iPhones worldwide under its belt and 1.7 billion active devices to tap into worldwide...”
Accordingly, Ives rates Apple shares an Outperform (i.e., Buy) along with a $185 price target. This figure implies ~17% upside from current levels. (To watch Ives’ track record, click here)
So, that’s the Wedbush view, what does the rest of the street make of Apple’s prospects? Based on 21 Buys vs. 6 Holds, the stock has a Strong Buy consensus rating. Share are expected to add 6% of muscle over the coming months, as the average price target comes in at $166.92. (See Apple stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.