Apple (AAPL) – Get Report is higher on Monday ahead of the expected debut of the tech company’s iPhone 12 and after Wedbush analysts affirmed their outperform rating and $150 price target on the stock.
Apple is expected to unveil the phone during a digital event that starts Tuesday. The latest iteration of the phone represents Apple’s most important product cycle since the iPhone 6 in 2014, according to Wedbush analyst Dan Ives.
“Importantly, with our estimation that 350 million of 950
million iPhones worldwide are currently in the window of an upgrade opportunity,
we believe this will translate into an unprecedented upgrade cycle for [Chief Executive Tim] Cook & Co.,” Ives said.
Ives expects four different models to be unveiled on Tuesday, including a 5.4-inch model starting a $699, a 6.1-inch model starting at $799, a 6.1-inch Pro model starting at $999, and a 6.7-inch pro model starting at $1,099.
Wedbush notes that Apple and its Asian suppliers expect higher demand for the larger and more expensive 6.7-inch model, leading the firm to say that the iPhone 12 could be a “once in a decade” launch.
“China remains a key ingredient
in Apple’s recipe for success as we estimate roughly 20% of iPhone upgrades will
be coming from this region over the coming year,” Ives said.
Wedbush’s recent checks have shown “considerable strength from the China region,” with positive trends heading into the important holiday season.
TheStreet’s Apple Maven will be covering Tuesday’s event in real time starting 12:30 EST here.
At last check Apple shares were trading up 3.2% at $120.68,
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Chinese astrology has it that 2020 is a “metal rat” year, and is associated with turbulence. Covid-19 has certainly provided a quantum of it. With a steep market dive in the first quarter, and sharp worldwide economic contraction, Asian business has had a rough ride. As star signs go, 2020 has so far lived up to its ratty astrological reputation.
The results of a survey conducted from August to September of Hong Kong-based Asia Business Council’s members, who are the chairmen and CEOs of some of Asia’s leading multi-national companies, collectively valued at nearly $3 trillion, and with some 3 million employees, offer insights against the turbulent backdrop of a year dominated by Covid-19. With a response rate of 83% (58 out of 70 members), the results showed a latent optimism and the confidence to re-tool investment focus. Though the outlook for job growth remains uncertain, not surprisingly, these leaders ranked public health and geopolitics as top concerns for their businesses.
A lot of numbers follow here, but they are very telling. When asked their outlook for business conditions in Asia over the next 12 months, and in spite of significant declines in their own revenues, half said they expect to see an improvement, while 33% expect conditions to worsen. Though not a table-pounding endorsement, this is a significant change from 2019, when 55% expected conditions to worsen.
Only 16% of members foresee a prolonged downturn or depression, and just 5% anticipate inflation. The wide distribution of an effective vaccine for Covid-19 is viewed as a pre-condition for a return to pre-pandemic economic levels–an opinion expressed by 91%—that speaks well of the latent, “coiled-spring” potential of
Since the U.S. stock market started its rebound in early April of this year, technology has been the leading sector. Driven initially by mega-cap tech behemoths Amazon
Many investors and pundits are concerned that tech stocks are experiencing a bubble, as in 1999‒2000. However, instead of excessive optimism about the future, rising tech valuations may reflect pessimism about future economic growth and profit weakness in other sectors. Given the current high unemployment rate of 8.4% and the large number of small business closures, Consumer Cyclical, Basic Material, and Energy stocks could have muted profits for an extended period. Technology’s secular growth, fueled by the Internet, cloud computing, ecommerce, and the ongoing digital transformation of business, is simply more attractive to investors than most other parts of the market.
S&P 500 overall earnings are expected to decline 3% in 2020 when companies with losses are excluded (see table above). However, Wall Street is optimistic for 2021, expecting a 13% bounce in profits. Many of 2020’s worst sectors are expected to have the highest earnings growth next year. Cyclical groups are expected to have the fastest profit growth, led by Energy (+20%), Transportation (+19%), Consumer Cyclical (+19%), and Basic Material (+18%). In contrast, Technology is only expected to grow roughly in line with the overall market at +14%. Given Technology earnings’ modest expectations and comparatively secular nature, the sector is more likely to meet earnings expectations than cyclical sectors with higher expectations.
I believe investors are still cautious or negative on the U.S. economy, so they will pay a premium for Technology stocks