Apple Stock Forecasted to Rise as Lifetime iPhone Sales Reach 1 Billion

[MacRumors]

Apple will report its fiscal third quarter earnings results tomorrow, and both the company and analysts project a year-over-year decline in iPhone sales and overall revenue for a second consecutive quarter.

Apple expects third quarter revenue of between $41 billion and $43 billion, which would be up to 18 percent lower than the $49.6 billion in revenue it posted in the year-ago quarter. The consensus among analysts is around $42.1 billion in revenue, which is essentially the midpoint of Apple's guidance.

Analysts estimate that Apple sold at least another 40 million iPhones during the June quarter, raising lifetime sales of the smartphone to some 987 million. Applying that sales rate to July -- just over 13 million iPhones per month -- it is likely that Apple will have sold its billionth iPhone between now and the end of this month.

The milestone comes at a time when iPhone sales are on the decline for the first time since the smartphone launched in 2007, an arguably inevitable lull following the smash-hit success of the larger-screened iPhone 6 series. The decline has affected Apple shares, which are down around 21 percent from a 52-week high of $123.91.

Nevertheless, many Wall Street firms expect iPhone growth to resume in 2017. The good news could extend to Apple's stock, as The Wall Street Journal yesterday reported that its "shares have been punished more than enough" and are due for a rally. It said the decline in iPhone sales "appears priced in."

Still, Apple has been punished more than enough. The iPhone slump appears priced in. And while the next iPhone, expected later this year, likely won't be a significant upgrade, there is optimism that sales growth will soon bounce back. Analysts forecast iPhone unit sales will rise 5% for fiscal 2017, which ends next September.

After briefly touching the $100 mark last week for the first time since early June, Apple shares are currently trading around the $98 mark, a price that some analysts feel undervalues the company.

Apple analyst Brian White of Drexel Hamilton reiterated his "buy" rating for AAPL today, based on a projected price target of $185. UBS analyst Steven Milunovich also issued a "buy" rating today with a 12-month price target of $115.

Apple is expected to introduce a wide range of new products in the second half of 2016 that could further raise its stock price, including the iPhone 7, Apple Watch 2, and long-awaited 2016 MacBook Pro.

Apple's third quarter earnings results will be released at 1:30 p.m. Pacific Time, followed by a conference call with CEO Tim Cook and CFO Luca Maestri at 2:00 p.m. Pacific Time. MacRumors will be providing live coverage of the news.

Update: BGC analyst Collin Gillis has, to the contrary, downgraded AAPL to a "sell" with a lower price target of $85. Apple shares are down nearly 1 percent in intraday trading, now hovering closer to the $97 mark.

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Article Link: Apple Stock Forecasted to Rise as Lifetime iPhone Sales Reach 1 Billion

 

[vertsix]

Truly impressive.

 

[keysofanxiety]

Preposterous numbers. I bet Ballmer's not laughing now.

 

[MaciMac100]

No, shares have not been punished enough, it will go down more after 3Q earning results. Iphone 8 with OLED is still too far away.

 

[Oblivious.Robot]

I bet one could swim in that much amount of money!
Also, I don't really know how to swim, but I'd happily die drowning in money.. lol

 

[iMember]

deleted post

 

[macduke]

A $185 price target is pretty insane when you consider the huge numbers we're talking about here. I'm not betting on iPhone sales increasing in 2017 if Apple plans to release an iPhone 7 this autumn which looks largely the same. Perhaps the dual-camera system will be insane enough to raise a good chunk of buyers up to the Plus pricing tier, or maybe the water proofing for some, but I think the real growth will come after the rumored 10th anniversary full redesign.

There's also a good chance the markets could see a lot of turmoil from the election this autumn. Coupled with many people in China taking out aggression on Apple due to the recent South China Sea international ruling, and I think the outlook for the next year isn't all that great. Then there will also be the people freaking out about the lack of a headphone jack and refuse to buy it, but will eventually come around in subsequent years after everyone has removed it. So after 2017? Much better outlook. I think a price target of $150 is reasonable a few years from now, especially if Apple can better lock down the wearables market with a more mature Apple Watch. I'm holding out on reinvesting for now, but what do I know? I'm no expert. Although many of these so-called "experts" are often miles off target.

 

[deany]

Anyone know how many of the 987m are in use and how many android are in use?

 

[ArtOfWarfare]

I'm curious - what's the list of all products that have sold 1B copies? Surely there aren't that many items in this category?

McDonalds has sold somewhere around 300B hamburgers... I can't think of any item that has been more mass-produced than that (unless you want to count something that isn't sold individually, like french fries or something, which I'm sure is into the trillions.)

 

[djcerla]

No, shares have not been punished enough, it will go down more after 3Q earning results. Iphone 8 with OLED is still too far away.

Given Apple has not warned otherwise, they will report numbers in line with guidance.

So, any disappointment would be a minor disappointment that will push the stock lower for some days, only to recover shortly after given the almost unbelievably low P/E.

But even a very small beat would translate into a much bigger leap up, that would continue down the quarter, because the stock is so severely undervalued now (current valuation assumes Apple's business would shrink 95% in 10 years, which is not realistic).

Summing up, it's riskier to bet against AAPL this time.

 

[keysofanxiety]

2012 Samsung Galaxy S3 (Big screen)
2014 iPhone 6
2015 Samsung Galaxy S6 Edge
2017 iPhone 7 (Edge screen)
Samsung better come up with something new in 2017 or the iPhone will continue to decline in 2019

2012 Samsung Galaxy S3 (Laggy as hell)

2015 Samsung Galaxy S6 Edge (Still laggy as hell)

That's kind of what's important.

 

[iMember]

2012 Samsung Galaxy S3 (Laggy as hell)

2015 Samsung Galaxy S6 Edge (Still laggy as hell)

That's kind of what's important.

You should thank Steve Jobs for that!

 

[5105973]

The lull in sales would not have to be "inevitable" if they applied a little more imagination. They could build a rugged iPhone version that's thicker and tougher and has better battery life for people who work outdoors or in trades that need a tough phone that can be away from the outlet for a couple of days--or for exasperated parents who don't feel like wasting their money experimenting on kid-proof cases.

I really think IPhones currently meet only one aesthetic sense with their slender delicate looks and pale colors. A rugged version in dark colors could fill a niche. It need not look like a truck tire, as that would be very unApple. It can still be relatively sleek and have clean lines, but made to take a few hits like some of the custom gear I have seen various places, like one I saw a paramedic using. At any rate, other than building a hideous battery case, I have not seen them attempt to address the consumers who are clamoring for more battery and say they would accept a thicker phone. They don't need to thicken the Plus into a brick. Modify something the size of the SE for starters.

 

[StevieD100]

2012 Samsung Galaxy S3 (Big screen)
2014 iPhone 6
2015 Samsung Galaxy S6 Edge
2017 iPhone 7 (Edge screen)
Samsung better come up with something new in 2017 or the iPhone will continue to decline in 2019

Sorry, but nothing Samsung does makes me even think about buying one. I vowed to never buy anything with a Samsung label on the outside after having almost a whole batch of HDD's go bad within a few weeks. Had real issues getting the warranty honoured.
As for the Edge Screen, totally useless for me.

 

[djcerla]

A $185 price target is pretty insane when you consider the huge numbers we're talking about here. I'm not betting on iPhone sales increasing in 2017 if Apple plans to release an iPhone 7 this autumn which looks largely the same. Perhaps the dual-camera system will be insane enough to raise a good chunk of buyers up to the Plus pricing tier, or maybe the water proofing for some, but I think the real growth will come after the rumored 10th anniversary full redesign.

There's also a good chance the markets could see a lot of turmoil from the election this autumn. Coupled with many people in China taking out aggression on Apple due to the recent South China Sea international ruling, and I think the outlook for the next year isn't all that great. Then there will also be the people freaking out about the lack of a headphone jack and refuse to buy it, but will eventually come around in subsequent years after everyone has removed it. So after 2017? Much better outlook. I think a price target of $150 is reasonable a few years from now, especially if Apple can better lock down the wearables market with a more mature Apple Watch. I'm holding out on reinvesting for now, but what do I know? I'm no expert. Although many of these so-called "experts" are often miles off target.

$185 will look almost cheap some years from now. Hell, even using Microsoft P/E as a industry reference, AAPL should be valued more than $185 TODAY.

Apple has just started capitalizing on their huge minndshare and brand awareness. They will be a very, VERY different kind of company, with much diversified interests.

Also, for right or wrong reasons (I believe, wrong reasons), the stock would jump in case of a CEO succession. AAPL has some amazing potential upside; my personal target is $195 (and I'm in at around $20 post-split).

 

[EricTheHalfBee]

This is why I laugh at people claiming Apple is in trouble for relying on the iPhone for most of their revenue. Even if iPhone sales stop growing, Apple could still sell 250 million a year to people upgrading from 2-3 year old devices. Apple would have $150-200 billion in revenue just from regular upgraders. Companies would KILL to be in a position that generated that much cash flow and profit on a consistent basis.

Meanwhile, Google makes 90% of their revenue from ads, yet nobody calls them out for relying to heavily on one product category.


Oh, and there's one more huge difference between someone like Apple and Google. Apple makes money selling things people WANT/DESIRE. Google makes their money selling things (ads) people DESPISE. Pretty clear who's on shaky ground.

 

[StevieD100]

Truly impressive.

Wall St won't think they are impressive. I think that the stock will hit $85. Any excuse to short the shares. That seems to be all they want to do to Apple. now if MS or Google released these figures the stock would rise 5-10%.
That is the way of the world.
I don't own any APPL stock nor do I have any indirect APPL stock ownership. I did once and held them for a long time before cashing out.

 

[dk001]

A $185 price target is pretty insane when you consider the huge numbers we're talking about here. I'm not betting on iPhone sales increasing in 2017 if Apple plans to release an iPhone 7 this autumn which looks largely the same. Perhaps the dual-camera system will be insane enough to raise a good chunk of buyers up to the Plus pricing tier, or maybe the water proofing for some, but I think the real growth will come after the rumored 10th anniversary full redesign.

There's also a good chance the markets could see a lot of turmoil from the election this autumn. Coupled with many people in China taking out aggression on Apple due to the recent South China Sea international ruling, and I think the outlook for the next year isn't all that great. Then there will also be the people freaking out about the lack of a headphone jack and refuse to buy it, but will eventually come around in subsequent years after everyone has removed it. So after 2017? Much better outlook. I think a price target of $150 is reasonable a few years from now, especially if Apple can better lock down the wearables market with a more mature Apple Watch. I'm holding out on reinvesting for now, but what do I know? I'm no expert. Although many of these so-called "experts" are often miles off target.

I would expect to see the US market blip the stock price but see China drive the trend. $185 is a tad bit high.

 

[ArtOfWarfare]

Oh, and there's one more huge difference between someone like Apple and Google. Apple makes money selling things people WANT/DESIRE. Google makes their money selling things (ads) people DESPISE. Pretty clear who's on shaky ground.

People like the internet. Until you come up with a way of sustaining the web that doesn't involve selling physical products or serving up ads, it seems unlikely that Google's ad business will be in any trouble.

 

[iMember]

Deleted post

 

[dk001]

Anyone know how many of the 987m are in use and how many android are in use?

Android is over 1.4 billion as of late 2015. Haven't seen any newer numbers. Suspect these will popup during the Nexus update...

 

[Chupa Chupa]

It's nice to say that, and as someone who is overweight AAPL in my personal portfolio, *hope* that is true to. But seems that hope, optimism, not reality drove this report.

Looking at AAPL's chart the last time it closed over $100 was May. Since then it has teased at $99 but never broken $100, even in the face of NYSE that is at an all-time high and other techs making new highs. As a shareholder right now, I'm patient b/c of AAPL's nice dividend at a time when other "safe" options for decent return are nearly non-existent.

That said it's still hard to see daylight in the cave I'm in. Apple still looks confused at how its going to grow earnings from here on out. It's not transparent at all on AW and the financial cluster it's in is $-wise, small, so for now at least it's not that. ATV is in the same group. Macs are way due for a refresh but even boosted sales can't make up for lagging iPad sales and likely flat iPhone 7 sales -- as rumors show it to be a placeholder until the more exciting iPhone 8. So I don't see huge growth at Apple for the remainder of this year and 3/4 of next.

Of course WS is irrational so quite possible it sees the other big tech names as overbought and come it to p/u AAPL as a "value play" since it's no where near it's all-time high. But right now, if you look at AAPLs chart there is no hint of Apple moving higher until it can first close above $100. Next goal would be $112. But for any real fireworks it needs to get past $123.

 

[IJ Reilly]

No, shares have not been punished enough, it will go down more after 3Q earning results. Iphone 8 with OLED is still too far away.

And you are shorting the stock heavily, right?

 

[EricTheHalfBee]

Android is over 1.4 billion as of late 2015. Haven't seen any newer numbers. Suspect these will popup during the Nexus update...

And here is why the 85% Android vs 15% iOS is a fallacy. If iOS only had 15% then there would only be 210 million (15% of 1.4 billion) active devices in use. A ridiculous figure that in no way is even remotely close to reality.

 

[IJ Reilly]

$185 will look almost cheap some years from now. Hell, even using Microsoft P/E as a industry reference, AAPL should be valued more than $185 TODAY.

Apple has just started capitalizing on their huge minndshare and brand awareness. They will be a very, VERY different kind of company, with much diversified interests.

Also, for right or wrong reasons (I believe, wrong reasons), the stock would jump in case of a CEO succession. AAPL has some amazing potential upside; my personal target is $195 (and I'm in at around $20 post-split).

PE doesn't mean a whole lot when revenue and earnings are declining.