Fans rush in for new iPhone
Employees greet customers Friday as they enter the Apple Store on New York’s Fifth Avenue to buy the new iPhone X. Concern about a limited initial supply of the new phone may have drawn more shoppers to Apple stores, analysts said.
Apple Inc. briefly became the first $900 billion company in the U.S. on Friday, the day its stores around the world were inundated with customers trying to get their hands on the new iPhone X.
Demand for the handset, which boasts a facial recognition system, an edge-to-edge display, and a price tag starting at $999, has prompted Apple to predict record sales of at least $84 billion in the Christmas quarter. The shares gained as much as 3.7 percent during the trading day, briefly tipping Apple’s market capitalization above $900 billion. They rose $4.39, or 2.6 percent, to close Friday at $172.50.
“Apple is taking the iPhone franchise to a whole new level with the iPhone X, pushing the company deep into the ultra-luxury smartphone market with the highest priced iPhone in the company’s history,” Drexel Hamilton LLC analyst Brian White wrote in a note to clients. “We believe Apple has attractive upside over the next 12 months.”
Apple shares have climbed almost 50 percent this year on expectations for the iPhone X, which comes 10 years after the original iPhone was released. Even with those gains and the record valuation, Apple still trades at just 19 times earnings. That’s a discount to Google parent Alphabet Inc., which trades at 31 times earnings; Netflix Inc., which trades at 200 times earnings; and Amazon.com Inc.’s 277 price-to-earnings multiple.
“It’s selling at less than the market multiple,” said Hank Smith, chief investment officer at The Haverford Trust Co., which owns Apple shares. In a Bloomberg Television interview, he said that unlike those other companies, Apple has to convince consumers to buy a new phone annually. “They have to sell millions of phones each year, so there’s always a chance those sales can come in late.”