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Apple Stock Gains, J.P. Morgan Increases Target Price

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Apple (AAPL) shares are trading 1.5% higher today at the time of this writing. Apple has gained today. J.P. Morgan (JPM) increased its target price on the stock due to better-than-expected iPhone sales, according to CNBC.

J.P. Morgan analyst Samik Chatterjee said, “We are modestly raising our iPhone volume forecasts and expect investor sentiment on AAPL shares to improve materially given the firm’s ability to drive upward revision to volume expectations despite the 2019 product cycle largely considered to be a muted one.”

The analyst increased Apple stock’s 12-month target price from $243 to $265. Currently, Apple stock is trading at $222.1. According to J.P. Morgan’s forecast, Apple will likely sell 1 million additional iPhones in the September quarter and 3 million additional iPhones in the December quarter—compared to previous estimates.

We have already seen several supply chain indicators pointing to strong demand for the latest lineup of Apple smartphones. As we mentioned earlier, J.P. Morgan thinks that Apple can have two consecutive years of bumper iPhone sales as 5G technology kicks off in 2020.

Several analysts expect Apple to release a 5G enabled smartphone in 2020. The release will result in solid upgrade demand from existing iPhone users. J.P. Morgan expects that Apple will sell 198 million iPhones in 2020 and 200 million iPhones in 2021.

Can Apple gain market share with its 5G iPhone?

The smartphone market has matured due to rapid growth since the beginning of the decade. The smartphone market might grow after 5G devices become available over the next year.

Goldman Sachs analyst Rod Hall expects 120 million 5G smartphones to be sold in 2020, according to a Yahoo report. The estimate is significantly higher than his earlier estimate of 50 million.

Hall said, “We believe Huawei’s ability to build 5G NR gNBs without U.S. components should help to drive meaningful deployments in China in 2020 which support additional Chinese 5G device sales.” Earlier, Hall’s estimates were conservative due to the ban on Huawei, which will likely impact 5G sales in China.

Although the company has sold over a billion iPhones, it’s still struggling to increase market share due to devices’ high price points, especially in emerging economies. During Apple’s September event, it didn’t increase smartphone prices for the first time.

Notably, 5G technology will mainly roll out in developed countries where Apple devices have a stronghold. Apple’s 5G technology will help its market share and increase smartphone penetration.

iPhone still accounts for most of the company’s sales. Although the business has seen lower sales for two consecutive quarters, it’s expected to return to growth sooner rather than later. Apple investors might come out unscathed if tech stocks struggle in the last quarter of 2019. Most of the outcome depends on Apple’s flagship product.

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