Evercore Raises AAPL Target on Strong iPhone 6 Demand

Evercore Partner analyst Rob Cihra raised his target price for Apple's stock to US$125 in response to stronger than expected iPhone 6 and iPhone 6 Plus sales. He now expects Apple to sell 39 million new iPhones during its fiscal fourth quarter, which ended on September 30, and 65 million units during the December quarter.

Evercore likes what it sees for iPhone 6 demandEvercore likes what it sees for iPhone 6 demand

Mr. Cirha had previously expected Apple to sell 37 million iPhones during its September quarter and 62 million in the December quarter. He said, "Moving to larger 4.7-inch iPhone 6 and 5.5-inch Plus screen sizes looks to have hit a sweet-spot, catalyzing a major upgrade cycle to an iPhone installed base now [over] 300 million worldwide."

Apple introduced the iPhone 6 and iPhone 6 Plus during a media event in September and pre-orders, which started only days later, saw the company run through 4 million sales. A week later, Apple reported selling over 10 million new phones during its in-store launch weekend.

The new iPhones ship with larger displays than previous models, offer better overall performance thanks to their new Apple-designe A8 processors, include better cameras, support NFC mobile payments, and more.

While Mr. Cihra is excited about the iPhone 6 prospects, he's less optimistic about the iPad. He told investors, "Outside iPhones, we still expect a weak [second half of the year] for iPads (-9%Y/Y in Sep-qtr and -10%Y/Y in Dec-qtr), particularly with the iPad mini being cannibalized by iPhone 6 Plus and this October's iPad refresh likely to be mostly evolutionary."

Apple hasn't announced new iPad models yet, but is expected to do so in time for the holiday buying season.

Looking forward, Mr. Cihra expects iPad sales will pick up again in 2015 for high-end models. He also thinks Apple could have a 13-inch iPad in the works to target the enterprise market, which will also boost sales.

Mr. Cihra's $125 target price for Apple's stock comes with an "Overweight" rating. Apple is currently trading at $99.70, down 1.05 (1.04%).

[Thanks to Barrons for the heads up]