Here's why 3 Wall Street analysts just boosted their Apple price targets

Carmen ReinickeMay 28, 2020, 00:50 IST

Apple CEO Tim CookAP Photo/Richard Drew

A group of Wall Street analysts this week updated their price targets for Apple, citing increased iPhone demand, iPhone services, and store reopenings.
Shares of Apple dipped slightly Wednesday.
Here's why three Wall Street analysts boosted their price targets for Apple.
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A slew of Wall Street analysts boosted their Apple price targets this week, citing increased demand for iPhones, store reopenings, and services as reasons that the tech giant is poised to gain.

The first of the group was Jefferies, which on Wednesday raised its price target for Apple to $370 from $350. That implies a roughly 17% jump from where shares of Apple traded at Tuesday's close.

Shares of Apple fell slightly Wednesday, sliding nearly 1% in intraday trading before paring losses. The tech stock has outperformed the broader market this year — it's up roughly 8% through Tuesday's close, while the S&P 500 index is down more than 7% in the same timeframe.

Wall Street as a whole is largely bullish on the Cupertino-based company led by CEO Tim Cook. Analysts have a consensus price target of $313 for Apple, and 29 rate the company "buy," 11 "hold," and five "sell," according to Bloomberg data.

Here's why three Wall Street analysts increased their price targets for Apple, ranked in order of lowest target to highest.

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1. Deutsche Bank: Store reopenings are 'a directional sign of improving trends'

A security guard takes the temperature of a customer outside the Apple Store on May 13, 2020 in Charleston, South Carolina. Sean Rayford/Getty Images

Price target: $320 from $305

Rating: Buy

On Tuesday, CNBC reported that Apple plans to open roughly 100 more stores in 21 states following coronavirus-induced closures. "After these stores re-open, ~130 Apple stores will be open in the United States, and we note that AAPL operates 510 stores globally," Deutsche Bank analyst Jeriel Ong wrote in a Tuesday note.

Ong continued: "We see store reopenings as a directional sign of improving trends and a drift toward a more normalized demand environment for AAPL. While high unemployment and smaller consumer pockets have us worried for the next-gen iPhone launch that typically comes in September/October, we continue to tilt bullish on AAPL."

Price target: $320 from $305

Rating: Buy

On Tuesday, CNBC reported that Apple plans to open roughly 100 more stores in 21 states following coronavirus-induced closures. After these stores re-open, ~130 Apple stores will be open in the United States, and we note that AAPL operates 510 stores globally, Deutsche Bank analyst Jeriel Ong wrote in a Tuesday note.

Ong continued: We see store reopenings as a directional sign of improving trends and a drift toward a more normalized demand environment for AAPL. While high unemployment and smaller consumer pockets have us worried for the next-gen iPhone launch that typically comes in September/October, we continue to tilt bullish on AAPL.

2. Bank of America: 'A larger installed base can eventually drive higher consumption'

Jason Lee/Reuters

Price target: $340 from $320

Rating: Buy

Bank of America analysts led by Wamsi Mohan released a note Wednesday breaking down Apple's installed base, or units currently in use. Apple has an installed base of roughly 1.5 billion units, with 1 billion of that being the iPhone.

"A larger installed base can eventually drive higher consumption of services and sales of incremental devices," Mohan wrote, adding that secondary market growth presents a large services opportunity.

He continued: "The confidence that the IB for iPhones can be stable to growing should provide comfort to investors that iPhones are unlikely to get disrupted in the foreseeable future and hence drive ~200mn upgrades annually, which combined with growing services drives a premium multiple."

Price target: $340 from $320

Rating: Buy

A larger installed base can eventually drive higher consumption of services and sales of incremental devices, Mohan wrote, adding that secondary market growth presents a large services opportunity.

He continued: The confidence that the IB for iPhones can be stable to growing should provide comfort to investors that iPhones are unlikely to get disrupted in the foreseeable future and hence drive ~200mn upgrades annually, which combined with growing services drives a premium multiple.

3. Jefferies: 'Apple has seen strong growth through online channels since the start of COVID-19'

Lisa Eadicicco/Business Insider

Price target: $370 from $350

Rating: Buy

"Our web traffic analysis indicates that Apple has seen strong growth through online channels since the start of COVID-19," Jefferies analyst Kyle McNealy wrote in a Wednesday note.

He continued: "Further, the new iPhone SE has seen very strong demand through the month of April. We think incremental confidence that strong online channels and iPhone SE performance can partially offset brick and mortar declines will help investors look past near-term volatility to the 5G Cycle."

Price target: $370 from $350

Rating: Buy

Our web traffic analysis indicates that Apple has seen strong growth through online channels since the start of COVID-19, Jefferies analyst Kyle McNealy wrote in a Wednesday note.

He continued: Further, the new iPhone SE has seen very strong demand through the month of April. We think incremental confidence that strong online channels and iPhone SE performance can partially offset brick and mortar declines will help investors look past near-term volatility to the 5G Cycle.

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Here's why 3 Wall Street analysts just boosted their Apple price targets

1. Deutsche Bank: Store reopenings are 'a directional sign of improving trends'

2. Bank of America: 'A larger installed base can eventually drive higher consumption'

3. Jefferies: 'Apple has seen strong growth through online channels since the start of COVID-19'