Wedbush analyst Daniel Ives maintained an Outperform rating on Apple Inc
The analyst noted Apple will be the first $4 trillion market capitalization by the end of 2024, given the pace of growth and monetization he estimated for Cupertino over the next year.
While there are lingering worries around iPhone shadow government bans in China, this issue is very containable for now.
Based on his recent checks, it has not dented demand for Cupertino in this vital region.
Ives noted that Apple is heading into a strong holiday season over the coming weeks that should translate into iPhone 15 growth that exceeds Street estimates for the December quarter on the heels of solid upgrade activity within the US and China markets that is resilient despite the bear noise.
The analyst did not find any negative revisions around iPhone units coming out of his recent Asian supply chain checks into the holiday season and early 2024, which speaks of a very consistent consumer demand environment around iPhone 15 and is good news for CEO Tim Cook.
The analyst's iPhone 15 unit checks globally give him confidence in the 220 million to 230 million units bogey for FY24, which could show an upside if this upgrade activity continues into the March and June quarters.
The Street continues to underestimate the underlying upgrade opportunity in China during the December quarter and FY24.
Ives estimated that there are now north of 100 million iPhones in China in the window of an upgrade opportunity.
Despite Huawei and geopolitical headwinds, Apple is seeing a healthy December quarter for the iPhone 15 in mainland China.
ASPs also have a significant tailwind in this cycle and are pushing up towards $925 from an $825 and $850 ASP over the past few years.
While Huawei is seeing market share gains in the domestic Chinese market, Apple's entrenched and growing installed base puts Cook in a unique position to monetize this critical market region.
Ives noted that the reports about moving more production out of China to India by Cupertino have helped successfully tone down the negative undertones from Beijing in the September and October timeframes.
With Services revenue back to steady double-digit growth and iPhone units that should be in the ~225 million range for FY24, Ives noted the "growth demise story" of Apple being spun by bears is a dynamic he has seen constantly over the past decade, and this is just another chapter in that book.
With roughly 240 million iPhones in the window of an upgrade opportunity globally now at play for iPhone 15 and Services re-accelerating into FY24, Ives views this as the golden opportunity to own Apple for the following year.
On a sum-of-the-parts valuation, Ives noted the Services business is worth $1.5 trillion to $1.6 trillion on a standalone basis, and this re-rating is a crucial dynamic for the stock over the next few quarters.
With a growing iPhone business again into 2024 on the heels of a new tech bull market beginning, the analyst noted that Apple is poised to have a strong year ahead.
Ives projected Q1 revenue and EPS of $117.96 billion and $2.10.
Price Action: AAPL shares traded lower by 0.95% at $195.69 on the last check Monday.
