Canaccord Raises AAPL Target to $112 on Strong iPhone 6 Expectations

| Apple Stock Watch

Canaccord Genuity thinks iPhone 6 will make big bucks for AppleApple is poised to sell the iPhone 6 in big numbers, and will charge more for the expected bigger display, according to Canaccord Genuity analyst Michael Walkley. He thinks high demand plus a bigger price tag will turn into even more sales worldwide, so he's raising his target price for the company's stock from US$102 up to $112.

"We believe the extended replacement rates combined with new larger-screen iPhones position Apple with its large installed base for record iPhone 6 sales," Mr. Walkley said. "We believe Apple will charge a premium for these larger-screen iPhones resulting in stable gross margin trends for overall Apple but with a higher gross margin dollar contribution due to an increasing revenue mix from higher ASP iPhones."

Apple hasn't announced the next iPhone model yet, but there have been plenty of leaks and rumors from which to craft an idea about what it'll look like and include. Those rumors and leaks paint a picture of a 4.7-inch display, and possibly a 5.5-inch version, a thinner body that more closely matches the iPad Air and iPad mini, a faster processor, longer battery life, and improved cameras.

A video hit YouTube recently showing what looks like the front glass from the 4.7-inch model surviving a scratch test and extreme flexing. That glass is presumed to be synthetic sapphire from Apple's own production line.

Mr. Walkley's new $112 target price for Apple's stock keeps his previous "Buy" rating. Apple is currently trading at $95.52, up 0.49 (0.51%).

Comments

geoduck

Analysts have high expectations for the iPhone 6. If Apple doesn’t live up to those expectations get ready for the usual “Apple is doomed” reports.

Expectations are building to silly levels. Unless the iPhone6 comes in multiple sizes, a rainbow of colors, and includes a sonic screwdriver it will disappoint and the stock will go down. Unfortunately it’s only July. We have around 8 weeks to go.

Matt Pro

With the new iPhone 6 & iPad Air coming out I better sell my old iPhone & iPad before the value of it drops. I usually search 8-13 different sites to find the best offer, but I just found this company that compares all the buyback companies in one spot, it’s called http://www.recomhub.com.

It’s like Kayak but for Apple Devices that show you all the offers in one spot.

Constable Odo

If Apple isn’t feeding analysts any information about the iPhone 6, anything any analyst comes up with is pure speculation.  I see no point in raising the share price on Apple stock that high because the stock is a long way from that number and there’s no guarantee that Apple’s share price will get anywhere near that high.  $102, maybe.  That would seem like a reasonable price target for investors by the end of the year.

vpndev

Even if Apple exceeds expectations, we’ll still get an “Apple is doomed” series of articles. Based upon nothing but puffery and pigheadedness.

That’s just how those folks are.

vpndev

>” ... and includes a sonic screwdriver ...”

Steve would never have shipped this. They’re doooomed.

RonMacGuy

I see no point in raising the share price on Apple stock that high because the stock is a long way from that number and there’s no guarantee that Apple’s share price will get anywhere near that high.  $102, maybe.  That would seem like a reasonable price target for investors by the end of the year.

Really Constable?  Do you not realize how stock pricing works?  It has nothing to do with “the stock is a long way from that number” or any “guarantee that Apple’s share price will get anywhere near that high”.  I mean, really?  There really is a science to it, not just flat-out guessing.  it all has to do with the perceived valuation of the company.  Not that I believe that most analysts have a clue what they are doing or talking about, but an increase in target from $102 to $112 is actually based on expected improvement in Apple’s financial performance based on anticipated iPhone 6 sales, not what seems to be a reasonable number in someone’s opinion.

 

vpndev

If Apple isn’t feeding analysts any information about the iPhone 6, anything any analyst comes up with is pure speculation.

I believe that Apple is carefully and deliberately providing enough information to generate “buzz” in the lead-up to product introduction. It’s a variation on the “secrecy” model such that some things are very secret and will be surprises on the day, while others things are “fairly well-known” and generate the interest and anticipation.

I don’t think Apple is providing this info directly to analysts - that would be problematic. But they’re “anonymous” leaks, sometimes confirmed by “usually reliable sources”. Lots of plausible-deniability here !

RonMacGuy

vpndev, Apple would get the buzz whether they intentionally leak info or not.  When you have hundreds of thousands of people designing and building iDevices made up of parts supplied from hundreds or thousands of suppliers there is absolutely no way to keep leaks from happening.  I do think Apple is a very secretive company and would rather NOT leak ANYTHING - this would actually build more excitement when Apple schedules their product releases.  Having some knowledge of potential screen size and other product information beforehand does take the excitement away from the Apple diehards, as well as builds unrealistic expectations from analysts, who then destroy stock price when Apple doesn’t release everything that had rumors floating around.  Why would Apple want rumors about two iPhone sizes being released in September (4.7” and 5.5”) when they may decide last minute NOT to release the 5.5” screen - then when they only announce the 4.7” screen the analysts scream “Apple wasn’t capable of releasing the 5.5” iPhone on time - they MUST be in trouble!!” and all hell breaks loose!!  No, Apple doesn’t leak anything on purpose…

vpndev

Ron - I understand your point but I disagree. If Apple were able to close down all “leaks” then speculation would run all over the place, and an amount of it would be Apple’s detriment.

To focus on a single example, there are “rumors” of two screen sizes for the new iPhone, 4.7” and 5.5”. Is it to Apple’s benefit for potential customers (both existing iPhone owners and possible switchers) to know that Apple is considering bigger screen sizes? Or should Apple ruthlessly suppress all such “leaks” and deny the rumors? Personally, I think that Apple benefits from having prospective customers “suspect” that a new iPhone will have a bigger screen. Otherwise, maybe the Galaxy S5 would have had better sales than the lackluster performance so far.

So there are leaks from parts suppliers - maybe Apple could clamp down on those somewhat - and then there are “leaks” where Apple lets out a few items of its own choosing. Teasing. Foreplay. Come hither.

RonMacGuy

Well vpndev, one thing’s for sure, we will never know the true answer to this.  You bring up some good points, and whether it is Apple themselves leaking it or Apple knowing that the leaks are going to happen and accepts that, the point is that leaks can/will happen and may be beneficial or detrimental depending on the situation.  Regardless, I look forward (as always) to seeing how closely the leaks prove to be reality.

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