- Apple has a new biggest bull after research firm D.A. Davidson lifted its price target to $375 per share, a new high among analysts covering the tech giant.
- The new target implies a 20% jump through the next 12 months, and arrives after Apple stock surged 86% in 2019.
- The company stands to win from hype around its upcoming 5G iPhones and robust growth in other businesses, analyst Tom Forte wrote in a Monday note.
- Zero-interest financing plans for Apple Card holders will also boost iPhone sales, the analyst added.
- Watch Apple trade live here.
Apple has a new biggest bull on Wall Street after research firm D.A. Davidson boosted its price target to the highest among analysts.
The tech giant's stock is poised to leap 20% over the next year to $375 per share, analyst Tom Forte said in a Monday note. Apple currently trades at roughly $313 per share, just above Davidson's previous target of $310.
Though the company's iPhone no longer accounts for half of its quarterly revenue, the research firm expects 5G to provide a potent shot-in-the-arm for the flagship product. Apple's upcoming devices will drive several years of growth after a "challenging" year for the iPhone, Forte wrote.
"There is enough complexity and hype when it comes to 5G that we believe Apple can exploit this multi-year opportunity and generate positive smartphone unit growth for, at least, its next two product launches - fall of 2020 and fall of 2021," he said.
The next iPhone is expected to support millimeter wave-based 5G when it releases in the fall, reliable Apple analyst Ming-Chi Kuo wrote in a Sunday note. The millimeter wave 5G boasts significantly faster speeds than today's 4G LTE networks. Kuo's prediction follows a Susquehanna report that suggested the next-gen phones would only ship with sub-6GHz 5G capabilities, and that the millimeter wave phones would be delayed to 2021.
The iPhone's slower growth through 2019 serves as a blessing-in-disguise for Apple, Forte added. The "maturation of the smartphone market" forced the Cupertino, California-based company to pivot to other revenue drivers, the analyst said. Investing in its wearables and services businesses places Apple in a healthy position to reap major revenue growth from the 5G cycle, he added.
Apple is already hot off an 86% gain in 2019, fueled by strong interest in the iPhone 11, Airpods Pro, and Apple Watch Series 5. Yet Forte expects one of the company's smaller product releases, the Apple Card, to grant a healthy boost to iPhone purchases come fall. Cardholders can buy the upcoming iPhones with zero-interest payment plans, and the payment flexibility "could be a catalyst for iPhone unit sales for several years," Forte wrote.
The tech company still faces hurdles from lofty expectations and lasting exposure to trade-war tariffs, the firm said. The iPhone 11 lifted the stock more than most analysts expected, and hopes are higher for the 5G lineup. Any negative development in US-China trade talks could also harm the stock, as tariff escalations or worse-than-expected trade negotiations could push production costs higher, Forte said.
"Led by CEO, Tim Cook, the company has done an amazing job in minimizing the negative impact from tariffs on its operating results, but short of a full deal between the U.S. and China, we see this as a persistent risk for the stock," the analyst wrote.
Apple traded as high as $313.75 per share on Monday, continuing a streak of record-highs for the tech giant. The company's shares are up roughly 7.5% year-to-date.
Apple has 26 "buy" ratings, 14 "hold" ratings, and seven "sell" ratings from analysts, with a consensus price target of $283.96, according to Bloomberg data.
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