Apple climbs as Wedbush says it will benefit from ‘once in a decade’ iPhone 12 launch that spurs strong demand

FILE PHOTO: A salesman uses his iPhone at a mobile phone store in New Delhi Reuters
  • Apple surged 4% on Monday ahead of its Tuesday “Hi, Speed” event, where it’s expected to officially launch its next generation iPhone 12.
  • According to Wedbush, Apple’s iPhone 12 will represent a “once in a decade” launch as it officially kicks off its 5G supercycle.
  • Based on channel checks by Wedbush, Apple and its suppliers are anticipating “stepped-up” demand for its 6.7-inch iPhone 12 Pro Max model.
  • Strong demand for Apple’s higher-priced iPhone 12 models will help boost average selling prices of the iPhone, which could lead to more upside for the stock, according to a Morgan Stanley note.
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Expectations are high for Apple’s expected iPhone 12 launch on Tuesday.

According to a Sunday note from Wedbush, the event represents a “once in a decade” opportunity for Apple to capitalise on its massive iPhone installed base of nearly 950 million users.

Wedbush isn’t alone in thinking that tomorrow’s event is a big deal for Apple.

Morgan Stanley said in a note last week that it expects tomorrow to be “the most significant iPhone event in years.”

Shares of Apple jumped 4% to $US121.71 on Monday, leading the market higher and helping technology stocks surge.

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Wedbush expects four different iPhones to be announced tomorrow, including a 5.4-inch iPhone 12 mini and a 6.7-inch iPhone 12 Pro Max, which would represent the largest iPhone display ever made. According to Morgan Stanley, the 6.7-inch iPhone 12 could cost as much as $US1,399.

That potential $US1,399 price tag for the larger iPhone 12 could help raise the average selling price of iPhones, which led Morgan Stanley to increase its earnings estimates for Apple as it believes the Wall Street consensus remains too low.

“Our pricing and mix analysis suggests our prior FY21 iPhone ASP forecast of $US754 was too low, and we raise our FY21 iPhone ASP estimate to $US772 (+5% Y/Y),” Morgan Stanley said.

Demand for the higher-priced and largest-ever iPhone is expected to be strong, which could help shares of Apple reach new heights.

“We are seeing Apple and its Asian suppliers anticipate stepped-up demand for the larger 6.7-inch model,” Wedbush said, adding that it sees Apple selling 75 million iPhone 12s with a “stretch goal” of 80 million units.

Wedbush sees 28% upside in shares of Apple, as it expects the stock to hit $US150.

“With 5G now in the cards and roughly 40% of its ‘golden jewel’ iPhone installed base not upgrading their phones in the last 3.5 years, Cook & Co. have the stage set for a supercycle 5G product release which should drive shares further in our opinion,” Wedbush said.