Cowen Securities Research recently raised its target price for Apple shares, arguing that Apple’s gains in The Indian market could offset losses in China. Analyst Krish Sankar said in a note to clients on Tuesday that upcoming iPhones, wireless sales and service revenue growth are expected to rise as short-term catalysts.
Mr. Sankar also said Apple’s management’s share buyback program in 2019 was a success, creating a sustained momentum.
“Apple’s share price has risen nearly 90 percent since bottoming out in January 2019,” Sankar wrote. ”
Sankar also forecast iPhone shipments to grow in 2020 and 2021 in the natural years. He expects iPhone shipments to grow 3 percent to 197 million units by 2020, boosting revenue to $147 billion. He added that the iPhone SE 2, if released, would add more benefits to the company, and that his current forecast model did not include revenue from the iPhone SE 2.
Sankar also expects Apple’s service to grow by about 16 percent in 2020 to $57 billion. Apple TV Plus’s revenue is expected to contribute $500 million in 2020, while the company’s content payments are expected to be $4 billion. The sector’s financial position is expected to improve next year as the Apple TV Plus free trial period expires. Sankar expects 50 percent of service revenue to come from ongoing subscription revenue by 2021.
AirPods is a new potential in Apple’s portfolio, contributing $3 billion to the company’s revenue in 2019, and Sankar expects AirPods revenue to reach $4 billion by 2020. Overall, Mr. Sankar said sales in Apple’s wearables division would grow 38 percent to $24.5 billion in 2020 from $18 billion in 2019.
Mr. Sankar forecast earnings per share of $13.54 and $15.65, respectively, for fiscal 2020 and 2021, in line with previous estimates, but raised his target price to raise his target price for fiscal 2021 to $325 from $290.