More: Apple (AAPL) PT Lifted at BMO Capital as Larger Size to Drive Growth
June 5, 2014 8:57 AM EDT
BMO Capital analyst Keith Bachman lifted his price target on Outperform-rated Apple ( NASDAQ: AAPL)
to $685.00 (from $610.00) after looking at the potential impact of the new iPhone. Bachman believes that
a larger screen iPhone, combined with Apple’s strength in software and ecosystem, will be well received
in the market.
The analyst notes that growth for large-screen smartphone devices with displays of 4.5”+ was 226% in
2013, and 150% in the March 2014 quarter. This compares to 22% growth for the the smartphone segment
in which the iPhone current participates (3.5”-4.4”). Smartphone units with a screen size of 4.5”+ represented
about 47% of the market in the March 2014 quarter, meaning that Apple is missing a large part of the market.
"If we assume that 25% of total smartphone units have screen sizes of 4.5”-4.9” in the December 2014
quarter, or 90-95 million units, and Apple garners a 20%-25% share, then we estimate that Apple can
sell about 20-22 million large-screen iPhones in the December 2014 quarter," the analyst notes.
As such, the firm is raising FY2014 and FY2015 estimates, driven primarily by changes to our mix and
ASP assumptions for the iPhone. They are raising FY2014 EPS estimate from $43.82 to $44.57
(consensus of $44.11) and FY2015 EPS estimate from $46.90 to $49.05 (consensus of $47.91).
They are also introducing our CY2015 EPS estimate of $50.05.
"While we are encouraged that Apple will likely be offering a more compelling iPhone with a display
size of 4.5”-5.0”, we believe that Apple is late and likely won’t have a 5”+ product until CY2015,
which is also late," he said.
o~~~ O
|
