While some Apple bulls believe 5G networking will boost phone buyers’ interest in new Apple devices, that position isn’t unanimously held.
Apple stock (AAPL) was recently down less than 1% to $204.73 as Nomura Securities analyst Jeffrey Kvaal on Friday maintained a Neutral rating on the company’s shares while boosting his price target by $5 to $180 and raising questions about whether shoppers will upgrade phones based on 5G availability.
The back story. While Apple may seek to shift more attention toward services and the value of its “ecosystem,” investors still watch iPhone trends closely.
Wall Street expects unit sales to come in around 185 million for the current fiscal year, according to FactSet, dipping next year before touching 195 million in 2021.
Earlier this week, Barron’s covered another analyst’s more optimistic outlook for the effect of 5G. Chris Caso of Raymond James, whose $250 price target makes him the Street’s biggest Apple bull, wrote that “the higher bandwidth and improved connectivity of 5G will provide a more compelling upgrade” for buyers in the next cycle.
What’s new. Kvaal isn’t as certain. “We have low expectations for the impending iPhone cycle (and the one beyond) and do not expect Apple’s new services to add materially to earnings,” Kvaal wrote Friday.
Nomura is “not yet convinced 5G will lift replacement rates even with the 2020 iPhones. We believe consumers are unlikely to rush to upgrade as 4G speeds are more than capable.”
Meanwhile, U.S. carriers have signaled that they are “unlikely to incentivize consumers to migrate to 5G handsets.”
What’s next. Wall Street’s average price target on Apple stock is around $213, implying 3.4% upside to Thursday’s close; that number has risen for most of 2019.
For Apple investors, however, there’s an important date that’s much closer on the calendar than 2021: July 30, when the company is scheduled to report fiscal third-quarter financial results after the market’s close. (A conference call is scheduled for 5 p.m. ET.)
FactSet’s consensus estimates for the quarter are earnings of $2.09 per share on revenue of $53.35 billion; last year’s numbers were $2.34 and $53.26 billion, respectively.
This story was first published on July 19, 2019. It was updated to reflect share price movement and to correct a reference to Caso’s price target.