With a share price up 55% above where it started the year, tech icon Apple (NASDAQ:AAPL) is easily eclipsing the S&P 500’s gains in 2023. Helping Apple keep the momentum going this week was a positive note from Morgan Stanley analyst Erik Woodring, who sees great prospects for Apple in… India.
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With average per capita GDP of less than $2,900 (just 4% of America’s $76,400), you might not think India would be the best place to try and sell $1,000 iPhones — much less $3,500 “Vision Pro” virtual reality headsets! But according to Woodring, India actually is Apple’s “next growth frontier,” and a market in which the tech giant is gaining market share, selling more (and more expensive models of its) iPhones, and enjoying an overall positive “ecosystem effect.”
As if all that weren’t good enough news, market forecasters believe that earlier this year, India probably passed China in total population, making it officially the world’s most populous nation — and the biggest (potential) market for iPhones on Earth.
Admittedly, Apple will be growing off of a very small base.
According to Woodring, Apple will sell only about $6 billion worth of products and services in India this year — about 1.5% of the company’s global total revenue, and barely a twelfth the size of the Chinese market. India’s number has been growing of late, but still amounts to only about 2% of total sales growth over the last five years, says the analyst. But this number is about to take off.
“Recent investments in brand awareness [by Apple in India], local manufacturing, and affordability programs, combined with India’s economic boom and growing digitization” all set the stage for India to grow significantly over the next half decade. Indeed, Woodring sees India alone accounting for as much as 20% of Apple’s total growth in “installed base” over the next five years, and in 10 years, predicts that one in 10 iPhones worldwide will have a phone number starting with “+91.”
Even with the company charging more “affordable” prices in the Indian market, 15% of Apple’s revenue growth over the next five years could come from the Subcontinent. Farther out, the analyst sees Apple signing up 170 million new users in India over the next 10 years, and growing its revenues to as much as $40 billion, a “7x” increase.
Which would be pretty impressive coming from the source of just 1.5% of Apple’s business today.
Is this prediction realistic? While the GDP number up above may give you pause, Woodring believes this GDP number could double by 2030. Plus, remember that this is just an average income number, and that in a population of 1.41 billion consumers, there will still be a large number of people with the income to afford Apple’s products. Woodring sees the number of Indians with incomes of $35,000 and up (his benchmark for being able to afford an iPhone in India) growing 5x through 2030, such that potential Apple consumers may actually grow faster than GDP in general.
With these favorable demographic tailwinds to support his thesis, Woodring feels confident predicting today that Apple stock will be worth $220 a share within a year (up ~14% from today’s prices). And he’s “overweighting” the stock, and urging investors to buy Apple — Morgan Stanley’s new “top pick” in tech.
The rest of the Street’s take on Apple is flashing mixed signals. On the one hand, based on 24 Buys and 7 Holds, the stock boasts a Strong Buy consensus rating. However, AAPL stock has just clocked a new all-time high, and most think the shares have run enough for now; going by the $193.57 average target, they are expected to remain rangebound for the foreseeable future. (See AAPL stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
