Susquehanna Raises AAPL to $650 on Strong iPhone 5S Sales

Apple's iPhone 5S is selling so well that Susquehanna Financial Group analyst Christopher Caso is raising his 12 month target price for the company's stock from US$625 up to $650. Those iPhone 5S sales are coming at the expense of the 5C model with Mr. Caso's manufacturing contacts showing a big shift to production of the higher end devices.

Shifting iPhone 5C production to the 5S means more money for Apple and investorsShifting iPhone 5C production to the 5S means more money for Apple and investors

Mr. Caso told investors,

Following our most recent checks, we believe December iPhone builds are running in the 52-54 million range, essentially in-line with our October 8 checks but better than our read in early December. Our checks indicate the mix has indeed shifted disproportionately to iPhone 5S, with production of 5S running nearly 4 times that of 5C. Importantly, we note there wasn't a fall off in demand for iPhone 5S after the initial strength of the launch. This shift should have beneficial revenue and gross margin implications for AAPL in C4Q.

Mr. Caso expects Apple will report first quarter earnings at US$57.1  billion, up from his earlier projection of $56.6 billion. He is projecting Apple will sell some 36 million iPhone 5S units, 10 million iPhone 5C units, 7 million iPhone 4S units, and 24 million iPads.

Apple introduced the iPhone 5S earlier this fall as the top of the line iPhone model. It sports a 64-bit A7 processor, improved graphics performance, and better photo quality. The iPhone 5C is a new mid-range model with essentially the same features as the now discontinued iPhone 5, but with a plastic back available in several colors.

Looking to 2014, Mr. Caso thinks Apple will unveil the iPhone 6 in June or July. "we still expect an iPhone 6 launch in June/July based on current build plans, but we also think the success of iPhone 5S has removed some of the time pressure for iPhone 6," he said, according to Barrons.

Mr. Caso's new $650 target price for Apple's stock comes with a "Positive" rating. Apple is currently trading at $547.10, down 3.67 (0.67%).