JPMorgan predicts Apple's stock will spike 20% on strong iPhone demand

iPhone 11 iOS 13Christoph Dernbach/picture alliance via Getty Images

  • Apple traded as much as 1.6% higher Monday after JPMorgan raised its price target on the company. The firm now expects the stock to climb 20% over the next 12 months.
  • The tech giant is selling more iPhones from its latest lineup than initially expected, said analyst Samik Chatterjee.
  • Initial estimates projected sales to slump as limited hardware upgrades and the wait for 5G compatibility would drive consumers to wait for the 2020 models.
  • Chatterjee also improved his outlook for 2020 iPhone shipments, saying "solid consumer interest in 5G phones at the premium end" will boost sales in the North American market.
  • Watch Apple trade live here.

Apple is poised to trade more than 20% higher by December 2020 on the back of robust iPhone demand, according to a JPMorgan analyst.

The bank boosted its price target on the stock to $265 per share from $243. The updated target is the highest among major Wall Street banks, and reflects the projected price for Apple stock in December 2020. JPMorgan rates Apple stock "overweight."

Apple shares traded as much as 1.6% higher Monday following the note's release.

Initial expectations for the iPhone 11 and 11 Pro models "were largely set for a muted production cycle in 2019" due to limited hardware improvements and anticipation for a 5G model in 2020, analyst Samik Chatterjee wrote in a Monday note.

He cited supply chain data and build estimates for its improved sentiment, projecting 187 million iPhone shipments in 2019.

Apple's next iPhone lineup should keep the momentum alive with the inclusion of 5G, Chatterjee added. The 2020 product cycle should bring 198 million phone shipments in 2020 and 200 million in 2021, according to JPMorgan.

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Apple is relying less on phone sales to drive revenue as it invests more in its Services business. Itss latest quarterly earnings report showed the iPhone making up less than half of its revenue for the first time since 2012, and its watch, AirPods, and services sales growing at a faster pace.

Apple's Arcade service launched earlier in September, and its TV+ streaming service is set for a November release. Both cost $4.99 per month for a family plan.

Apple traded at $221.67 per share as of 10:25 a.m. ET Monday, up roughly 40% year-to-date.

The iPhone maker has 24 "buy" ratings, 19 "hold" ratings, and five "sell" ratings from analysts, with a consensus price target of $221.11, according to Bloomberg data.

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