Between backlash for admitting to slowing older iPhone speeds and uncertainties surrounding iPhone X demand, Apple Inc. (Nasdaq: AAPL) investors have experienced quite a bit of turbulence in the past couple of weeks.
But even with all the near-term question marks for investors, Drexel Hamilton analyst Brian White says Apple is still one of the best tech stocks for long-term investors to own heading into 2018.
According to White, Apple has several bullish catalysts ahead that should push the company’s market cap above the historic $1 trillion market cap mark for the first time. White says the iPhone X “supercycle” that many analysts have discussed will be much more durable than the market is anticipating. While iPhone X unit sales may be boosted in part by pent-up demand from customers waiting for the highly anticipated device, White says the longer-lasting cycle will be driven by rising average sales prices in the luxury smartphone market.
“We believe the iPhone X and this year’s new iPhone innovations will drive an upward trajectory in [average sale price] and opens up the opportunity for gross margin surprises over the next 12 to 24 months,” White says.
White also says the Apple ecosystem has plenty of room to grow with the upcoming launch of the HomePod smart speaker in early 2018. The HomePod is Apple’s answer to the Amazon.com (AMZN) Echo and Alphabet’s (GOOGL, GOOG) Google Home.
Apple may have missed out on the holiday shopping season by delaying the HomePod launch, but White says the HomePod gives Apple an excellent opportunity to integrate its Siri personal assistant into the core of customers’ connected homes.
Finally, White says the market may not be fully appreciating the size of Apple’s cash hoard and the company’s willingness to return that cash to shareholders in the wake of corporate tax cuts.
White says…
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