Apple Inc. (NASDAQ:AAPL) iPhone growth is slowing, and the firm will need a new product if it wants to ramp up growth, as per the analyst at Guggenheim Securities. Guggenheim Securities has initiated a ‘Buy’ rating on the stock with the target price of $140, or more than 20% above its current trading level.
Apple needs a new product
The analysts expect rough quarters for the iPhone maker from December through June on the back of flat iPhone sales. However, an uptick is expected with the release of the iPhone 8 in September. Analysts are expecting iPhone sales to grow 3% year over year in 2017 followed by 13% in the fiscal year 2018 fueled by the new iPhone.
Analysts suggest that investors should go for the stock because innovation in the iPhone 8 will fuel demand. Next-gen iPhone could “drive a big new upgrade cycle…..We believe any hardware changes [on the iPhone 8] have the potential to make an iPhone look ‘new’ again for the first time in three generations,” say analysts.
However, analysts also believe that Apple Inc. (NASDAQ:AAPL) will need a new product such as a smart car for incremental growth. Early last year Project Titan was a daily news darling. The project was (and still is) Apple’s self driving car initiative. Very little has been heard about the project lately – even the rumor mill has been strangely quiet. Many analysts believe an Apple Car could be the future of the company.
As per the analysts, Apple is mainly a product firm, but it can create another revenue stream by considering a subscription bundle. The bundle could include the iTunes or the Apple store and a hardware product such as an iPhone or iPad.
Apple’s services segment is of expected to grow 13% year over year in fiscal 2017, to account for 12% of the revenue and 19% of the gross profits, expect analysts. For fiscal year 2017, Apple’s revenue and earnings per share are expected to grow 3% yoy to hit $222bn and $8.58 respectively.
Fiscal Q1 numbers on January 31st
Separately, Cupertino-based firm has scheduled its Q1 earnings call with the investors on January 31st 2017. Apple’s Q1 result will be inclusive of sales for the holiday season and full three-months sale of the new iPhone 7 and 7 Plus lineup. Apple’s Q1 numbers will benefit from the launch and initial sales of AirPods, which were launched last month after much delay.
Also, the Q1 results will be the first 14 week quarter for Apple since Q1 of 2012. It means that the firm has got extra time for sales, which as per the analysts could add 3-6m iPhone to the final tally, notes 9to5mac.
Apple Inc. (NASDAQ:AAPL) will conduct a live broadcast of its earnings call with the investors on its website on the day of result.
On Wednesday, Apple shares closed down 0.11% at $116.02. In 2016, the stock was up over 10% while in the last one-month, it is up almost 6%. The stock has a 52-week high of $118.69 and a 52-week low of $89.47.