It’s been another great year for Apple, Inc. (AAPL) investors in 2017. But with Apple up nearly 50 percent on the year and within a stone’s throw of a $1 trillion market cap, investors need a compelling reason to continue to hold the stock heading into 2018. Fortunately, Citi analyst Jim Suva[WD] says there are plenty of reasons to expect 2018 to be another great year for Apple investors. Suva has reiterated his “buy” rating and $200 price target for Apple, and here are six reasons he likes the stock in 2018.
- The iPhone
By some measures, the iPhone is the single most successful product in history, and investors shouldn’t over-think the role the iPhone will continue to play for Apple. Suva expects the iPhone X “supercycle” to continue into 2018 thanks to initial supply constraints following its November launch. As a result, he says investors can expect a better March quarter than usual. The iPhone X should significantly boost Apples iPhone average sales price, and a growing global user base represents even more opportunity for upgrades. In addition, Suva says the new 2018 iPhone lineup will come with Face ID, bezel-less design and possibly more color choices.
- Tax Reform
Apple may very well be the single biggest beneficiary of all from corporate tax reform. Apple has roughly $250 billion in cash overseas, and the company will likely bring some or all of that cash back into the U.S. during the proposed repatriation tax holiday. As a result, Suva says Apple stock could get a boost from an increase in capital returns or even some blockbuster buyout deals as the company puts that cash to good use. Between tax cuts and share buybacks, Suva estimates Apples earnings per share will get a 15 percent boost in 2018.
- Services Revenue
One of the fortunate side-effects of Apple’s global iPhone user base is…
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