Apple (NASDAQ 🙂 has finally released its highly anticipated Tuesday, announcing a new growth cycle for the technology giant, according to many analysts.
The California-based company unveiled four different iPhone models: the iPhone 12 mini, a 5.4-inch model starting at $ 699; a 6.1-inch device from $ 799, a 6.1-inch Pro model from $ 999; and a 6.7-inch pro model starting at $ 1,099.
All of these iPhones operate on a new wireless standard known as 5G, which can transmit data as much as 10 times faster than current 4G LTE technology. The iPhone 12 offered a new look, with a flatter appearance reminiscent of the iPhone 4. Prices for the new phones were roughly in line with last year, although 12 Mini is the cheapest new version.
Apple Chief Executive Tim Cook, who hosted the virtual launch, confirmed that 5G support will be available for the full line of new iPhones. Verizon (NYSE 🙂 CEO Hans Vestberg, who also attended the event, told the audience that the 5G service would reach 60 US cities by the end of the year.
Verizon is also deploying its low-band 5G network in more than 200 cities to provide wide coverage, he said, adding:
“Until now, most people have opted for a wait-and-see attitude towards 5G. They've been waiting for 5G to become real. With the iPhone, the wait is now over. "
Despite a craving for the new models among customers, Apple stock did not react wildly after release on Wednesday, falling slightly during the session to close out at $ 121.19, up 0.07% on the day.
However, the initial negative response did not support many analysts' optimistic view of the demand that 5G phones could create in the coming months.
New Prices Make iPhone More Attractive
Thanks to those expectations and Apple's success in increasing service revenues, it became the first US government company to launch this years $ 2 trillion in market value eclipsed. Analysts polled by FactSet predict, on average, that iPhone revenues will grow 15% to $ 160 billion in the fiscal year beginning Oct. 1. That's about $ 6 billion less than the 2018 fiscal year record, when the $ 1,000 iPhone X helped boost sales. even when shipments did not reach a new high.
"The price dynamics is the great app for the launch of the phone," wrote Harsh Kumar of Piper Sandler & Co. in a research note quoted by Bloomberg. "Prices were lower than we expected, which is important in the current global pandemic."
Apple is struggling to revive the growth of iPhones as consumers hold their phones longer. After the recession caused by COVID-19, that task became more challenging as millions lost their jobs and companies had to shut down. out of this segment peaked in the first quarter of Apple's 2018 fiscal year. But Apple's competitive pricing, its first major redesign in three years, and the lure of faster speed could prompt users to upgrade once the global economy emerges from recession.
China Factor
Analysts are also bullish on sales in China, Apple's second largest market, where 5G networks are more advanced than the US
Dan Ives, an analyst at Wedbush Securities, estimates that 350 million of the 950 million iPhones worldwide are currently in the spotlight of an upgrade opportunity.
In an interview with CNBC Ives, who has been predicting a super cycle for months, he said:
“It really comes down to whether Apple can surpass 2015's 231 million peak units. If they can, this will enter the Cupertino hall of fame like a super cycle. If they can't, the disappointment will be reflected in the stock. "
Even if Apple fails to generate enough momentum for its new models amid a pandemic and global recession, the company's diversification strategy away from the hardware is working fine and provides good reason to remain enthusiastic .
With rising revenues from its services, the company is also increasing sales of its hardware accessories, such as AirPods and Apple Watch, which have driven impressive growth in its wearables business. During yesterday's launch, Apple also unveiled its first Beats headphones with USB-C charging, replacing its proprietary Lightning port with the $ 50 Beats Flex.
RBC Securities, which raised its price target for Apple from $ 111 to $ 132, said in a note yesterday that AAPL's upcoming Fitness + offering is a valuable addition.
The note read:
“In addition to meaningfully contributing to earnings / earnings per share, we expect remarkable synergies between Watch / TV / iPad / Services and see the offering as another way AAPL can drive customer loyalty and, most importantly, repeat business ".
Bottom Line
Apple remains an attractive stock to buy, even after its 65% increase this year. The company's innovation machine, growing service segment and wearable devices provide good reason to be excited about the stock, even if the new iPhones don't deliver the desired results in the short term.
