Apple stock will move higher in ‘super-long cycle,’ says longtime bull Piper Jaffray

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Longtime Apple Inc. bull Piper Jaffray said this week it expects the stock to continue to move higher in what it expects to be a “super-long cycle” versus a “supercycle.”

Analysts led by Michael Olson said a survey of 400 iPhone buyers has bolstered their expectations for the mix of iPhones to be sold in fiscal 2018.

“Specifically, we are modeling iPhone X to account for 38% of iPhones sold this year, essentially in-line with our survey at 35% of buyers intending to buy iPhone X,” they wrote. “Our estimated mix of iPhone 8 in fiscal 2018 is 40% and our survey was exactly in-line at 40%.”

The survey supports Olson’s estimates for an average selling price of $720, revenue of $270.6 billion and per-share earnings of $11.17. The current FactSet consensus is for fiscal 2018 revenue of $273.9 billion and EPS of $11.43.

The analyst reiterated his outperform rating on the stock AAPL, +1.14% , the equivalent of buy, and $200 price target, which is third highest of analysts polled by FactSet, coming after Guggenheim Securities at $215 and Drexel Hamilton at $235. The $200 price target is about 17% above the stock’s current trading level.

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“Beyond the March [and] June quarters, we anticipate a wider array of X-generation devices similar to iPhone X will launch in [the fall of 2018],” said the note.

While Olson concedes he has no direct information about Apple’s iPhone plans for the year, 3D sensing component suppliers “are being told to generate volume for the Fall-18 launch that is 3 times what was made for iPhone X this year,” he wrote.

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“We expect a lower priced X-gen option (likely the current iPhone X with a price cut) and we wouldn’t be surprised to see a “plus” X-gen model in ’18, which tests the upper bounds of what buyers are willing to pay for an iPhone and provides an option for those looking for more real estate in their iPhone screen.”

That could support higher ASPs in fiscal 2019, he wrote.

The note comes just days after Apple admitted that it had slowed down iPhones with older batteries through software upgrades, causing an outcry from its customers. The company acknowledged that as batteries age, they can struggle to respond to a phone’s power demands and shut themselves down unexpectedly.

On Saturday, the company said it would make discounted replacement batteries available immediately and not starting in late January, as initially announced.

Apple shares closed Tuesday up 1.8% and have gained 49% in the last 12 months, while the S&P SPX, +0.70% has gained 20% and the Dow Jones Industrial Average DJIA, +0.88% has gained 26%.

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