When considering the fortunes of the FAANG family since the viral outbreak, it appears Apple (AAPL) has most to lose. Amazon and Netflix can count their internet driven models as particularly well set up for a hibernation period. And while Google and Facebook stand to lose significant advertising revenue, they are still less reliant on physical product. Apple, on the other hand, has seen the disruption to its supply chain and production line severely impact this year’s plans.
The giant from Cupertino was laying the groundwork for a September launch of the iPhone 12, the first model to boast 5G capabilities. The question now for the world’s most successful company, is whether following the economic downturn, launching its flagship product into a consumer environment still reeling from a world-wide pandemic and the associated depressed economic climate, is the right move.
The answer, according to Wedbush’s Daniel Ives, is no. The 4-star analyst believes there are too many variables at play to ensure a safe launch on the previously planned date, and argues a launch in September, would amount to a risky decision. Ives believes the launch will be moved back to coincide with the holiday season.
“Apple has one shot at its first 5G launch and tepid success out of the gates due to a lukewarm consumer appetite would be a disaster scenario that further plays into the mindset of Cook & Co. as they ponder the potential timing of this flagship product rollout,’ Ives said.
Nevertheless, delaying the “5G super cycle” doesn’t alter Ives’ long-term bullish view of Apple. In fact, the analyst notes, the company’s ”teflon like” service business is “poised to hit roughly $60 billion in FY21.” Furthermore, Ives maintains that at the current coronavirus hit levels, the risk/reward on the stock is “extremely compelling.”
Ives summed up, “In a nutshell, Apple's stock now is pricing in depressed iPhone units, a 5G launch getting delayed, and supply chain not normalizing till the May/June timeframe. We believe iPhone 12 now likely launches around the holiday timeframe in a more normalized consumer environment with "springboard-like demand" momentum heading into FY21.”
To this end, Ives maintains an Outperform on Apple, to go along with a $335 price target. The implication for investors? Upside of 36%. (To watch Ives’ track record, click here)
What does the rest of the Street have to say? Apple currently holds a Moderate Buy consensus rating based on 25 Buys, 9 Holds and 2 Sell ratings issued over the last 3 months. The average price target is $318.55, and could provide investors with upside of 30%. (See TipRanks’ Analysts’ Top Stocks)