Why We Increased Our Price Estimate For Apple To $154

by Trefis Team
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We have updated our price estimate for Apple (NASDAQ:AAPL) from around $139 per share to $154 per share, on account of a stronger outlook for the flagship iPhone segment. Apple is expected to launch its 10th anniversary iPhone this fall, and we expect the device to set off a massive upgrade cycle, given that it will sport the company’s first complete redesign since 2014. The new device is now expected to be priced at a considerable premium, potentially staring at $1,000 – well above the current iPhone 7 line up, which has a $650 entry point (related: Why Apple Will Have Unprecedented Pricing Power For The Anniversary iPhone). Apple should be able to pull this off, as its users are typically very loyal and less price sensitive, and the introduction of potentially radical design/features after two years of minor refreshes could give them all the more reason to upgrade. The increasing proliferation of equipment financing schemes will also help the company mask the price bump. Although the new device is expected to be more expensive to manufacture compared to previous iPhones, we believe that margins should largely hold up in the near term.

See Our Complete Analysis For Apple Here

  • We now project that iPhone ASPs will rise from $665 in 2017 to roughly $680 in 2023, compared to a slight decline per our previous valuation model.
  • We project that margins will contract at a slower pace over the long term from 43% in 2017 to 39.5 % in 2023, compared to 34% in 2023, per our previous model.
  • We are also marginally increasing our market share forecasts for iPhone.

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