A new Apple analyst just came out with a very bullish call, saying Street underestimating 5G impact - CNBC

Members of the media take photographs of iPhone 11, iPhone11 Pro and iPhone 11 Pro Max smartphones in the Apple Marunouchi store on September 20, 2019 in Tokyo, Japan.

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Wall Street's estimates for the impact of 5G iPhones on Apple are too conservative, according to Jefferies' new Apple analyst.

"We think the Street underestimates the benefit Apple gets from this heading into the 5G cycle," said Jefferies' equity analyst Kyle McNealy in a note to clients Tuesday. McNealy has taken over coverage of Apple for Tim O'Shea, who departed Jefferies this summer to become an investment banker, according to his LinkedIn.

Customers and investors have been awaiting Apple's rollout of the 5G supported iPhones, which are reportedly set to release in 2020. Wall Street is estimating that Apple sells 190 million 5G devices in 2021, which is 9% below the 6-year average unit volume for the iPhone. McNealy said these estimates are too conservative and estimates 208 million iPhones shipped in 2021.

McNealy said Apple analysts are discounting how many aging iPhones will need to be replenished. Even if upgrade cycles are every 3 or more years, the demand will be there, he said.

The industry marketing push behind 5G will also be significant for Apple, said McNealy.

"The marketing machines at every wireless operator will be driving a 5G message with consumers," he added.

McNealy has a $260 price target, which places him among the top 5 most bullish Apple analysts on the Street, according to Tipranks.com. Apple currently trades around $218 per share.

McNealy also noted how different the 5G phone will be from past iPhones.

"Given the advanced technology and components, 5G devices will be high-end devices (where Apple holds dominant share)," said McNealy.

McNealy's revenue projections for 2020 and 2021 are 2% and 4% above Street expectations, respectively.

McNealy said the only "negative offset is a softer Chinese economy." IPhone sales have been slumping in China along side the two countries trade dispute.

Shares of Apple rose nearly 1% in premarket trading on Tuesday.

—with reporting from CNBC's Michael Bloom.

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https://www.cnbc.com/2019/09/24/a-new-apple-analyst-just-came-out-with-a-very-bullish-call-saying-street-underestimating-5g-impact.html

2019-09-24 11:52:14Z
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