IPhone Upgrade Program: A Rating Upgrade For Apple

  • UBS reiterates “buy” rating on Apple with a price target of $150
  • Analysts' bullish on Apple after it launched iPhone Upgrade Program
  • Apple stock is trading below its 100 day moving average
iphone_upgrade_program_rating_upgrade_for_apple

UBS has reiterated its buy rating on Apple (NASDAQ:AAPL), with a price target of $150. Apple stock has declined by more than 10% in last six months, prompted by general market decline and concern regarding slowdown in iPhone sales in China. China is Apple’s second largest market after US, contributing 25% of Apple’s revenue. What made the Chinese market more important for Apple was the growth rate. Apple had more than doubled its revenue from China in the last quarter. At that rate, China would have soon overtaken US as Apple’s largest market. But China is currently experiencing slow-down in growth which has roiled international markets and forced Federal Reserve to postpone hiking interest rates.

AAPL stock chart

Apple price databy amigobulls.com

iPhone Upgrade Program

While the China slowdown had Apple investors worried, the recent decision by Apple to finance iPhone purchases has generated a lot of interest among investors. Amid a series of new product announcements, Apple introduced iPhone upgrade program on purchase of iPhone 6S and iPhone 6S plus. The program allows users to own the device with a monthly payment of $32 for 24 months. What makes the program more enticing is the fact that after making 12 monthly payments the customer is allowed to purchase the latest iPhone, and start a new two year period monthly payment plan. Many analysts believe that the program will shorten iPhone refresh cycle, padding the Apple bottom line.

Rating Upgrades

Analysts at UBS, who have reaffirmed their “buy” rating with a price target of $150, said that the instalment plan could be big deal for Apple with a potential to add 36 cents to Apple’s EPS, driving the share price to $200, which is around 70% more than today’s price. Similar recommendations were made by other analysts. Analysts at RBC, who have a price target of $150, said that the stock could touch $165.  Apple stock has declined from an all-time high of $134 and is currently trading below its 100 day and 50 day moving averages.

The Bottomline

iPhone Upgrade Program is likely to be a strong profit driver for Apple. And with iPhone 6S off to a strong start, Apple’s current depressed valuations makes Apple a good investment opportunity.

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Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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