Evercore Raises AAPL to $125 on Increased iPhone Demand

Posted by at 2:54 pm on October 1, 2014

Apple is not the only company that believes the new iPhone 6 and iPhone 6 Plus will not only drive a bigger upgrade cycle, but also bring at least some switchers from the Android platform. Evercore Partners analyst Rob Cihra has reiterated his “overweight” rating for AAPL and raised the price target to $125, along with encouraging investors to buy the stock in a new memo to clients. He also published optimistic estimates for both the September and December quarters in terms of iPhone sales.

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Cihra believes Apple will sell a total of 39 million iPhones by the end of business today for the September quarter, a 15 percent year-over-year increase boosted by the record-setting opening weekend the iPhone 6 and iPhone 6 Plus brought to the tail end of the quarter. In a note obtained by AppleInsider, he estimates that the company could sell 65 million iPhones in the December quarter, which would be a 27 percent increase year-over-year.

The analyst believes that upwards of 300 million iPhone owners are in range of their upgrade period across the next year, in part due to the rise of programs that make it easier for buyers in North America to upgrade smartphones more often. That plus the attractiveness of the new models to Android users may make this a “major upgrade cycle” for the company, with Cihra saying the new sizes have have “hit a sweet spot” with consumers.

On top of record-setting sales, Cihra also believes the average selling price of the iPhone will grow, reversing a stagnating trend among high-end smartphone makers and a market where most of the growth has been in low-end phones, as feature-phone users continue to migrate. The 5.5-inch iPhone 6 Plus commands a $100 premium over the iPhone 6, and Apple has staggered the capacities to 16GB, 64GB and 128GB — encouraging buyers to stretch to buying the middle option over the base model for a perceived increase in value.

Evercore Partners predicts Apple will report revenues of $40.1 billion for the September quarter, a net increase of seven percent, and earnings per share of $1.31, an 11 percent year-over-year increase. For fiscal 2015, which for Apple will end exactly a year from today, Cihra has posted estimates of $210 billion and $7.53 per share, a 16 percent increase over expected 2014 totals. Apple will report its fiscal year-end and Q4 results in a conference call on Monday, October 20 after markets close.

Rumors have the possibility of new iPads and perhaps other refreshes being announced the next day, on October 21. Apple will also be able to announce the results, if it chooses to, of the opening weekend sales in China, where the iPhone 6 and 6 Plus will finally go on sale beginning October 17.

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