While the Apple Car is just speculation, one Wall Street analyst thinks the possibility of Apple producing a self-driving electric vehicle is enough to be bullish on its stock.
According to a new report from Yahoo Finance, UBS analysts upgraded Apple to a “buy” rating at UBS on Wednesday and awarded a $142 USD price target despite analysts calling the latest iPhone cycle “underwhelming.”
The analysts affirm the Apple stocks represent a potential 18 percent surge in the value of its share over the next 12 months, despite the lack of an iPhone supercycle. AAPL stock is currently down 15 percent from the high in January.
“While our analysis of iPhone procurement and mix drives our FY22 estimates higher and our ‘Core’ value to $128 (from $115), our analysis of the auto market and Apple’s multi-year investment in the industry (self-driving car licenses and LiDAR patents) suggests to us Apple’s auto optionality is worth at least an incremental $14/share,” the analysts said.
The upgraded target price comes in part from “stable long-term” demand for the iPhone 12 and beyond, as well as higher average selling prices and Apple’s rumored foray into the world of cars, the latter of which is based on ever-increasing rumors Apple wants to release a self-driving electric vehicle.
“We expect Apple’s platform strategy and market share in the global PC and smartphone markets should enable Apple to introduce a branded BEV and achieve a minimum 5% market share in the global BEV market,” the analyst wrote. “Over the next ten years, we forecast the global automotive market will likely transition to almost 100% EV opening up a 90M unit market to new entrants with large installed bases of loyal satisfied customers like Apple.”
UBS has also revised its 2021 iPhone shipment estimations up by 5M to 220M, citing higher 5G demand in China. He also raised his FY22 revenue and earnings-per-share estimates by 4% and 7% respectively “based on those higher phone sales and stronger average selling prices” of the iPhone 13.