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Apple AirPods and Apple Watches could help drive a return to growth, analyst says

Investment News, Uncategorized

Apple Inc. looks poised to return to growth this fiscal year, an analyst says, buoyed by continued momentum for AirPods, Apple Watches, and services.

 

Evercore ISI’s Amit Daryanani upped his price target on Apple AAPL, +0.66%  shares to $305 from $275 Wednesday, writing that the company’s wearables and services businesses should help give revenue a lift even if other product lines fail to grow. He predicts about 6% revenue growth for fiscal 2020, which ends in September.

 

In the more immediate term, Daryanani is encouraged by signs of strength for the company’s products during the holiday stretch. He points to Adobe estimates showing that AirPods were a top seller on Black Friday and said that the iPhone 11’s lower price “has been particularly well received in China.”

 

Daryanani has an outperform rating on the stock.

 

His note was one of two bullish updates out Wednesday, with the other coming from Bank of America’s Wamsi Mohan. He’s upbeat about 5G adoption as a driver of consistent iPhone growth for the next three calendar years. The 5G cycle “could be smoother with lower peaks and troughs,” Mohan wrote in his note to clients.

 

He estimates that Apple will ship 20 million 5G iPhones in calendar 2020 after an expected launch of the company’s first 5G-enabled device in the fall. That’s up from his prior estimate of 10 million. Looking ahead to calendar 2024, he estimates that 70% of Apple’s phone shipments will be compatible with 5G.

 

Mohan raised his price objective to $290 from $270 while maintaining a buy rating on shares.

 

Apple shares are up 0.6% in Wednesday trading, and it’s gained 71% so far this year. The Dow Jones Industrial Average DJIA, -0.05%  has risen 19% in that time.

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