Analyst Alex Guana of JMP Securities has raised his target price for Apple from $135 to $150 based off of exceptionally strong demand for the iPhone 6 and 6 plus, as well as for the iPad Air 2 and iPad Mini 3. This target stock price is the most ambitious on Wall Street right now.
Guana had this to say: “We raised our estimates and price target on the stock, following a review of what we saw from Black Friday to Cyber Monday. Demand is exceptionally strong both in the U.S. and China, with lead times at higher memory count models of the iPhone 6 Plus and also the iPhone 6. Also, there’s been strong demand for the iPad Air 2. The iPhone 6 Plus is stocked out at all three major carriers in China, and we’re seeing the longest lead times we’ve seen at Apple stores there, so very consistent with what we’ve seen in U.S. Overall, we’re seeing very limited supply, with lead times still very strong. That suggests average selling prices (ASPs) can be very strong for Apple, and the gross margin potential is high. Another observation is that at Best Buys in major metros in NYC, Chicago, Dallas, LA, etc., 90% or more of them, the iPad Air 2 is stocked out, as is the iPad Mini 3. We like what we’ve seen.”
Guana also pointed out that the demand was not from a limited supply. Even Apple has been surprised by the amount of demand for the iPhone 6 and 6 Plus, and have been unable to keep up with demand even with its massive, diversified supply chain. He is now projecting $67 billion in revenues for this quarter, which is even above Apple’s own guidance. What is telling about Apple’s success is how its competition is fading away. Its only real competitor, Samsung, has been slipping, and Apple has been able to begin gaining market share. Guana also believes that the new iPhone offerings are a major step forward for the company, especially as 4G networks are becoming established in China..