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Apple Set to Witness a "Super Long Cycle" Per Piper Jaffray


Apple Inc’s AAPL radically overhauled iPhone X was anticipated to be a super cycle and it seems like it is turning into one.

Going a step ahead, Piper Jaffray analyst, Michael Olson in his research titled “Why AAPL Can Keep Working: 'Super Cycle' Is Now 'Super Long Cycle'' has stated that, “this could well turn into a “super long cycle” driven by the next iterations of iPhone X.

He was quoted by CNBC saying, “Apple may be increasingly well positioned to experience a strong multi-year iPhone trajectory, not the short-lived 'super cycle' that was anticipated. We believe an elongated iPhone cycle in FY18, followed by a wider array of iPhone X 'offspring' in Fall-18, along with growing awareness and interest in augmented reality (fueled by developers populating app store with new use cases and, longer-term, addition of rear facing 3D sensor), will all push out the need for Apple to answer the question of 'what's next?.'"

Apple Inc. Revenue (TTM)

Apple Inc. Revenue (TTM) | Apple Inc. Quote

Citing a threefold jump in Apple’s demand for 3D sensing components from its suppliers, Olson expects Apple to release three new editions next year with better OLED displays.

Robust Black Friday Sales

The tenth anniversary edition of the iPhone is witnessing robust sales with 6 million units sold over the Black Friday weekend, per a report from Rosenblatt China Technology. Nearly 15 million units have been sold since its launch. The firm expects as many as 3 million units to be shipped in the current quarter. Apple is also ramping up iPhone X production with 3 million units produced per week and is expected to increase it by another one million by December, per the report.

Apple releases its new models in September and the December quarter usually sees high sale activity. In the year-ago period, Apple sold 45.5 million units of iPhone. This time around, reportedly, it looks like Apple is set to break all records and sell 80 million iPhone units.

Sales of iPhone X will get a boost as the phone features a glass body, a dual curved edge-to-edge OLED display with wireless charging (USB-C), higher storage options and a far superior camera.

For the current quarter, Apple expects sales to be in the range of $84 to $87 billion compared with $78.4 billion reported in fiscal first-quarter 2017. Higher average selling price should significantly contribute to the top line. The Zacks Consensus Estimate is pegged at $85.8 billion.

iPhone, Revenues and Stock Price

iPhone continues to be the mainstay of Apple’s revenues. The revolutionary phone, released in June 2007, changed the world forever and catapulted Apple to new highs. The success of iPhone over the last decade is well chronicled.

Reportedly, Apple has sold over 1.2 billion iPhones across the globe, earning over $760 billion in revenues.

Since the first iPhone release, Apple shares have skyrocketed compared with the industry to which it belongs. Over the last decade, Apple stock has returned 885.7% while the industry witnessed a rally of 418.5%.

There are also speculations that robust iPhone X sales will make Apple the first company to touch the $1 trillion valuation mark. Currently, Apple’s market cap is nearly $882 billion. Its shares have increased about 48.4% year over year and hit a 52-week high of $176.24. Shares are currently trading at $171.85.

Apple carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Better-ranked stocks in the broader technology sector include Groupon Inc GRPN, Activision Blizzard ATVI and HP Inc HPQ. While Groupon sports a Zacks Rank #1 (Strong Buy), Activision and HP carry a Zacks Rank #2 (Buy).

Long-term earnings growth rate for Groupon, Activision and HP is currently projected to be 10%, 13.8% and 5.3%, respectively.

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