By Yasin Ebrahim
Investing.com – Apple (NASDAQ:AAPL) rose on Friday as analysts continued to debate whether the upcoming launch of 5G iPhones will resurrect demand and trigger a wave of phone upgrades.
Morgan Stanley and Nomura raised their price targets on Apple, but have a different outlook on how much Apple's foray into 5G will boost iPhone upgrades.
Morgan Stanley (NYSE:MS) raised its price target on Apple to $368 from $296, citing a peak in smartphone replacement cycles – the time customers take to replace their smartphones.
The bank suggested that features such as longer battery life, 5G technology and "aggressive" iPhone trade-in offers implies the cycles "can't stretch much further and may in fact begin to shrink."
Nomura raised its price target on Apple to $280 from $225, but appears less optimistic over Apple's upcoming slate of 5G iPhones. The bank pointed to the previous drop in iPhone upgrades during the transition from 3G to 4G as a cautionary tale.
The expected $40 to $80 incremental bill of materials cost will likely also be a barrier to adoption, Nomura added.
But weaker iPhone demand does not carry the threat of impending doom for Apple as it once did.
Apple has made strides to pivot growth toward services and wearables, which now account for 27% and 37% of profits respectively, Morgan said.