Apple’s shares inched higher in trading on Tuesday (Sept. 26), after investment company Raymond James raised its price target on the stock from $170 a share to $180, reversing a sell-off ever since the tech company launched the iPhone 8 and iPhone X.
According to a news report for CNBC, Raymond James Analyst Tavis McCourt said he was prompted to raise the price target after an internal survey showed “surprising” demand for the iPhone X, which comes with the hefty price tag of $999 or more.
According to the analyst, while the survey doesn’t imply there will be a super upgrade cycle for the iPhone 8 and the iPhone X, it does reveal that there is demand for Apple’s iPhone X over the iPhone 8. He said that the recent pullback in shares of Apple provides an entry point for potential investors. Apple’s iPhone X is slated to be released on Nov. 3.
Based on the survey, McCourt said 37 percent of consumers who already own an iPhone intend to upgrade during the course of the next 12 months, which could translate into iPhone sales. Meanwhile, 44 percent of respondents in surveys conducted during the past three years said they were gearing up for a upgrade. The analyst noted that 14 percent of consumers plan to upgrade during the course of the next three months.
Last year, those figures stood at 15 percent and, in 2015, at 17 percent. McCourt added that 46 percent of those who were gearing up for an upgrade signaled they would be willing to spend the extra cash to buy an iPhone X.
That’s good news for Apple, given the more expensive device means higher margins for the tech company. In fact, Raymond James thinks it can enhance Apple’s gross margins by two percentage points in fiscal year 2018 and increase average selling prices by 10 percent next year. For fiscal 2018, the analyst expects an EPS of $10.85, up from $10.50 a share.