Reports that China intends to ban government workers from using Apple’s (NASDAQ:AAPL) iPhones first surfaced in September, and the issue has now reared its head again.
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According to a recent Bloomberg report, a growing number of government agencies and state-owned businesses have told employees to stop bringing their iPhones and other foreign devices to work. In no fewer than eight provinces, numerous agencies and businesses have instructed workers to switch to local devices, a meaningful change compared to just the few government agencies that were implementing the ban in September.
However, Wedbush’s Daniel Ives, a 5-star analyst rated in the top 2% of the Street’s stock pros, does not think this latest development is about to significantly derail Apple’s prospects. In fact, given the “pace of growth and monetization” taking place at the tech giant, he believes that by the end of 2024, Apple will be the first company boasting a $4 trillion market cap. “While there are lingering worries around iPhone shadow government bans in China for now this issue is very containable and has not dented demand for Cupertino in this key region based on our recent checks,” the 5-star analyst went on to say.
Talking of China, despite the growing popularity of China-based mobile phone brand Huawei and ongoing geopolitical headwinds, Ives thinks the the Street “continues to underestimate the underlying upgrade opportunity” in the region during the December quarter and FY24.
The analyst reckons there are more than 100 million iPhones in China due an upgrade and notes that his checks show the iPhone 15 is having a “very healthy” December quarter in mainland China. “While Huawei is clearly seeing market share gains in the domestic China market, the entrenched and growing installed base of Apple puts Cook & Co. in a unique position to monetize this key market region,” Ives said.
Moreover, this cycle is also being defined by higher ASPs (average selling prices), which are heading up towards $925 from the past few years’ ASP of $825/$850.
Accordingly, Ives maintained an Outperform (i.e., Buy) rating on Apple shares, backed by a Street-high $250 price target. There’s potential upside of ~27% from current levels. (To watch Ives’ track record, click here)
Looking at the consensus breakdown, with a total of 24 Buys vs. 8 Holds, the analysts’ view is that this stock is a Strong Buy. That said, the upside appears capped with the $203.16 average target making room for only slight gains of 4% over the coming year. (See Apple stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
