The analyst is confident that the tech giant has ability to make more sales
Despite reaching at its 52-week low, an analyst at Credit Suisse, Kulbinder Garcha expressed on Tuesday that he is reiterating his price target of $150 on Apple’s shares.
Since last week, after the announcement of the company’s quarterly earnings, its shares have been declining. For the first time ever in thirteen years, the tech giant reported quarterly revenue decline and for the first time ever, the company recorded a decline in the sales of its core product –iPhone –in comparison with the prior year.
But, according to Garcha, a lot of the elements which have been hurting the stock are ephemeral. He is confident that in the upcoming six to 12 months the negative factors can possibly be reversed.
He added that iPhone’s demand is slow due to rate of upgrade. Earlier, the company has impressive rate of upgrade with iPhone cycle while this year, the upgrade was quite modest. Moreover, the Cupertino Calif. firm is expected to release the next generation iPhone, dubbed iPhone 7, sometime later this year.
According to his analysis, the iPhone consumers are likely to change their devices in a span of around 13 months and close to 90 to 95% of them didn’t let go of the brand therefore, in line with this assumption, the stock is likely to revive and the iPhone sales will gain momentum.
He added that since the tech titan’s stock is trading at 9.5 times forward earnings therefore the company’s valuation is duly in line with that of other smartphones manufacturers. He also cited that what distinguishes the company from other competitors is the “strong retention” which the firm has.
Garcha said that in order to shake the firm foundations of the tech behemoth, any rival has to come up with a handset which can easily giver better user experience across TV platforms, computer, and mobile at substantially lower prices.
Credit Suisse put forward their analysis of the probable international growth and cited that, in the next five years, the company has the ability to generate another $90 to $95 billion in China if it can get hold of the Chinese consumers who are willing to spend around $600 a year on Apple products. Additionally, for coherent international growth, the tech titan has to expand in the markets of Brazil, Russia, and India.
According to senior research analyst at Piper Jaffray, Gene Munster, the sales cycle and demand for iPad and iPhone differs at great extent. Therefore, the projection that the tech giant hasn’t been able to revive from the declining sales of iPad couldn’t be iterated on iPhones. He said that having been handling the trends of iPhones for almost nine years, the analysts can easily guess how the iPhones sales will turn out.