What Can Drive A 30% Upside To Apple’s Stock Price?

by Trefis Team
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Apple‘s (NASDAQ:AAPL) stock has performed well over the last year, rising by over 25% on account of increased optimism surrounding the iPhone business and solid growth of the company’s Services business. In this analysis, we outline an upside scenario, which could see the stock rally by another 30% to levels of about $230 per share. Our base case estimates are for the market price of about $178.

We have created an interactive dashboard for the upside scenario. You can come up with your own estimates for Apple’s stock by dragging the blue dots on the charts for Apple’s smartphone market share, iPhone ASP, service revenues, net margins and valuation multiples.

The upside scenario assumes that Apple is able to improve its smartphone market share to levels of about 17% from about 15.5% per our base case, driven by higher sales of its new models and its larger selection of legacy models (iPhone SE, 6S and 7).

The upside scenario assumes that iPhone ASPs will rise to about $800, versus our base case estimate of $760, driven by sales of the flagship iPhone X and higher storage versions of other iPhones.

The upside scenario projects Services revenue to grow to close to $40 billion, driven by higher subscription and App Store revenues. Other product sales also post stronger than expected growth, driven by new products such as the HomePod, Airpods and the Apple Watch, which is gaining traction.

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