Analysts believes the iPhone maker could extend further despite competition from Google’s Pixel and other Android smartphones
Canaccord Genuity recently weighed in on Apple, Inc. (NASDAQ:AAPL) and noted that the company has profited significantly in the third quarter due to Samsung’s recall of Galaxy Note 7. The firm highlighted that the iPhone maker has captured 106% of industry profits during 3Q, up from 2Q’s 75% profit. As a result, the firm reiterated a Buy rating and a $140 price target (PT) on Apple stock. The PT implies 25.30% upside potential over Monday’s close at $111.73.
Canaccord Genuity Analyst, Michael Walkley, estimated that the iPhone user base is likely to exceed 570 million on year end. In his view, the impressive growth in installed base has the potential to drive strong replacement sales and earnings in the future. It may also generate additional cash flows for the iPhone maker to fund solid capital returns over long term.
“The capture of 106% of premium smartphone profits contributed to the losses at LG, Microsoft, Lenovo, Blackberry and HTC during the quarter,” he noted. “While we anticipate a stronger upgrade cycle in C2018 with the 10-year anniversary iPhone 8, iPhone 7 demand is sold and should bridge the gap until a new form factor iPhone is likely released in 2017.”
Given steady iPhone sales, Mr. Walkley expects Apple’s capital return to grow in 1QFY17. Thereby, the firm recommends investor buy AAPL shares at this point in time.
As projected by the Street, iPhone sales would reach the peak by its tenth anniversary on June 29, 2017. The FactSet consensus had estimated 225 million iPhone sales for the fiscal 2017. However, bullish analysts are confident that Apple can sustain a strong hold on the market for high-price iPhones.