Bullish Apple analyst gets even more bullish

Apple Inc. (NASDAQ: AAPL) received a favourable analyst call on Monday from Canaccord Genuity following its recent earnings report. The call was made based on the growing iPhone user base, which should drive steady long-term sales and strong cash flows.

Analysis from Apple’s fiscal first quarter indicate that the company dominated the smartphone market in the December quarter, capturing 93% of industry profits.

Canaccord Genuity believes that strong iPhone 6 replacement sales should continue in 2015 with only 15% of 404 mln iPhone users having upgraded to the new devices.

Over the longer term, a gradually moderating growth rate is expected between 2016 and 2018, with 650 mln iPhone users by the end of that term, while in 2018 global premium smartphone subscribers are anticipated to total 1.82 bln.

Canaccord Genuity believes that the modest base growth expectations, coupled with long-term replacement sales, would position Apple for steady sales of $210-215 mln iPhone units annually between the 2015 and 2018 calendar years.

These levels should generate strong annual cash flows to easily fund a long-term capital returns programme. Apple could further monetise this large iPhone user base through additional products, software and services to help drive ongoing long-term sales growth. As a result, Canaccord Genuity is setting its 2016 earnings per share (EPS) estimate at $9.42. The firm’s price target of $145 is based on a multiplier of 15 times 2016 calendar year EPS, and just above $140 seen by Credit Suisse.

Apple shares were up about 0.5% at $119.55 on Monday. The stock has a consensus analyst price target of $131.20 and a 52-week trading range of $73.05 to $120.51.