FBN Securities analyst Shebly Seyrafi this morning responded to yesterday's iPhone 5 launch by boosting his target price on the stock to $1,000, from $800. He keeps an Outperform rating on the shares.
He's seeing the same things everyone else is seeing: iPhone 5 is going to add some juice to September quarter results, and the company is almost certainly to going to follow up yesterday's launch with the debut of the iPad Mini. Next year, he thinks, the company will add a distribution deal with China Mobile and announce a connected television - both developments that have the potential to substantially boost revenues and profits.
Seyrafi notes that last year Apple announced the iPhone 4S on October 4; basically freezing the market heading into the event and resulting in a weak fiscal fourth quarter. But this time, we get a week of iPhone 5 shipments in the September quarter. Seyrafi figures the company could sell 4-8 million iPhone 5 units before the month is over; his forecast for September quarter iPhone units jumps to 29 million, from 24 million. For FY 2013, he now sees 174 million iPhone units, up sharply from his previous forecast of 149 million units.
"AAPL continues to be a strong new product story," the analyst writes. "It has the iPhone 5 shipping soon, it is expected to have a new iPad mini shipping in FY Q1, China Mobile is a large opportunity for AAPL starting next year and the iTV is generally expected to be launched over the next year or so."
Based on expectations that the much-discussed (but not announced) iPad Mini will be a big hit, Seyrafi now sees FY 2013 iPad units reaching 96 million units, up from 81 million.
As for China, note that the company generated 16% of June quarter revenue from "Greater China," which includes Hong Kong and Taiwan, growing 50% year over year. He notes that the number of 3G subscribers in China reached 176 million in the June quarter, up 27% sequentially from Q1. "As more of China Mobile's 683 million subscribers use 3G connectivity (only 10% do so far), and as Apple is expected to ramp strong new business with China Mobile next year, we believe that the China opportunity remains strong for the company."
And there's the connected TV. Not everyone believes this product is going to happen, but Seyrafi does. If such a thing launched in mid-2013, and assuming that Apple can take 7% of the TV market existing calendar 2014, he thinks the company can generate $28 billion to $29 billion in incremental revenue and $5 billion to $6 billion of additional operating margin in calendar 2014, boosting profits by more than $4 a share in fiscal 2014.
AAPL is up $8.20, or 1.2%, to $677.99.
