- iPhone 12 is the best selling iPhone so far.
- Estimates suggest that Apple has the capacity to ship over 240 million units.
- China is still a cornerstone of the 5G supercycle.
Continued demand for iPhone 12 exceeds the most optimistic expectations of Wedbush. The company forecasted that by mid-2022, Apple’s market capitalization could reach $3 trillion. Lead analyst Daniel Ives writes in a note to investors that recent supply chain checks in Asia continue to be “incrementally bullish” about iPhone 12 and iPhone 12 Pro demand. For the December quarter, the current trajectory is higher than Ives’ previous bull case scenario.
Ives claims that the supply chain saw iPhone unit builds in the region of low to mid 90 million, based on those tests. He also projected a number of around 80 million in December with a probability of construction in the mid-80 million range. Ives added that the latest iPhone unit builds data reflects a 35% rise over the initial estimates of Wedbush’s and Wall Street.
Expected sales of Apple’s iPhones
Ives estimates that overall iPhones delivered ticked up 5 percent over the past few weeks in the March quarter and are now in the region of 60 million to 70 million. Initial builds with a possible upward skew for the June quarter are in the low 40 million range.
“We have not seen a launch trajectory uptrend such as this in several years for Apple and the only iPhone trajectory similar would be the iPhone 6 in 2014 based on our analysis,” Ives wrote.
Apple has the capacity to ship upwards of 240 million units in 2021, the analyst claims. That is well above Wall Street’s current 218 million units estimate. Ives adds that with 20% of upgrades projected to come from the area alone. But, China is still a cornerstone of the ongoing “5G supercycle.” The analyst says he is seeing promising signs from China going into 2021.
“In a nutshell, while services growth remains the key to the Apple re-rating story over the past six months, the hearts and lungs of the Apple growth story are built around iPhone installed base upgrades,” Ives writes.
AAPL’s valuation
Based on a sum-of-the-parts valuation on Wedbush’s 2022 AAPL fiscal year forecast, the analyst is holding his 12-month price goal of $ 160. That breaks down to a $1.1 trillion 15x multiple on services and a $1.7 trillion 6.5x multiple on the rest of Apple’s hardware business.
The analyst has also bumped his bull case to $200, resulting from raising certain forecasts for services to $1.3 trillion in 2022 and $2.2 trillion for the hardware company of Apple. In the next 12 to 18 months, the bull case, Ives says, will result in a $3 trillion market valuation. AAPL’s shares are currently trading on Wednesday morning at $130.76, up 1.54% in intraday trading.
