- Financial Institutions published their price target for Apple. Wedbush Securities thinks that the stock could reach $400 by the end of the year
- In addition to the iPhone 12, Apple could launch an iPhone 9 also called iPhone SE 2
- Apple bought AI startup for $200 million
Bullish Apple Projections for 2020 Published by Morgan Stanley, Nomura and Wedbush Securities
Apple’s share has risen more than 100% over the past 12 months. The updated Apple price target revision from Morgan Stanley is based primarily on market anticipation of the “5G super cycle coming”. We could observe a reduction of smartphone replacement cycles time. According to Katy Huberty, Head of North American Technology Hardware Equity Research at Morgan Stanley said “iPhone owners are now holding onto their phone for close to four years amid changes in how phones are priced and a slowdown in the pace of tech upgrades […] However, longer battery life and upcoming 5G technology, which will enable new functionality like augmented reality and combined with aggressive trade-in offers that subsidize upgrades for existing iPhone owners, suggest replacement cycles can’t stretch much further and may in fact begin to shrink”.
The Morgan Stanley analyst raised her price target on Apple stock to $368 from $296. According to her, there could be 235 million iPhone shipments and a six months shortening of the remplacement cycle time. Thus she raised her bull case to $515 from $407.
However, Nomura analysts are more skeptical about consumer acceptance of the 5G transition. “We expect the $40-80 incremental BoM (bill of materials) cost to a 5G phone to be a barrier to adoption […] no link in the value chain: consumers, suppliers, operators, or Apple itself is likely to shoulder that cost burden”. Nomura retained a “neutral” stance on Apple stock and said that its new target is $280 per share, but was “unwilling to go further”. During the 3G to 4G cycle, the upgrade rate declined. That’s why, Nomura thinks that the 5G supercycle coming won’t increase significatively the Apple’s sells.
Wedbush Securities announced that Apple stocks could reach $400 by the end of the year. Its analysis is based on 5G supercycle and Apple’s services. Wedbush confirms its recommendation of “out-performance” but keeps its 12-months price target of $350.
Apple wants to increase iPhone sales
Moreover, Apple’s dependency on the iPhone for earnings has declined, with services and wearables now constituting 27% and 37% of profits.
Apple’s goal is to increase its iPhone sales. In addition to the iPhone 12 which will be presented in mid-September, Apple is trying to position itself in the mid-range segment. The iPhone 9, also called iPhone SE 2 will be “cheap iPhone” like the iPhone SE in 2016 . It could be launched in March, thus Apple hopes to conquer new market share.
Apple Acquired Xnor.ai
The company from Cupertino bought AI startup for $ 200 million. Amazon, Microsoft and Intel were also interested in Xnor.ai. Apple bought several startups specialized in AI these last years such as Silk Labs, Regaind , Laserlike, Drive.ai, Turi, among others.
Focused on machine learning, Xnor.ai has developed a chip for several devices (car, smartphone, etc.) that works locally without the cloud. It accelerates and secures the calculation. This technology will help its new owner in data protection.
Apple wants to stand out from Facebook or Google by being examplary about the protection of customer privacy. By the way, Apple is in conflict with the US government because of data encryption of the guilty of the shooting at Pensacola naval base, early December 2019.