Apple on track to become the first company worth US$1 trillion

iPhone X seen driving pent-up upgrades in China

PUBLISHED : Saturday, 04 November, 2017, 2:38am
UPDATED : Saturday, 04 November, 2017, 2:43am

Apple’s shares rose to a record high on Friday as more analysts set a trillion-dollar valuation on the company, following a blowout fourth quarter and an upbeat forecast that quashed investor concerns around the iPhone X.

The stock rose as much as 3.7 per cent to US$174.26, briefly breaching US$900 billion in market value, amid declines in the broader market. The gains added nearly US$32 billion to the company’s market capitalisation.

The Cupertino, California-based company also forecast a strong holiday quarter ahead, which will include the iPhone X that started selling on November 3.

“We see iPhone X unlocking pent-up iPhone upgrades, especially in China, driving more than 20 per cent iPhone unit growth and a revenue and earnings beat in 2018,” analyst Katy Huberty on Morgan Stanley said.

The glass-and-steel US$999 phone appeared to have brought back the frenzy associated with iPhone launches – long lines formed outside Apple stores across the world as fans flocked to buy the new phone.

The company will make 30 million iPhone X units during the current quarter, Nomura Instinet analysts estimated, allaying production worries related to the phone.

Apple blows past Wall Street expectations to post strong results as China revenue grows

IPhone X’s launch follows weeks of concerns among analysts about the production of the phone, which for the first time includes new facial identification software to replace the fingerprint used on previous phones.

Apple had said on Thursday it expects first-quarter revenue of US$84 billion to US$87 billion, at the high end of analysts’ average expectation of US$84.18 billion, according to Thomson Reuters I/B/E/S.

“We – and many others – had feared that guidance could be weaker, reflecting only nine weeks of the flagship iPhone X and limitations on supply,” Bernstein analyst Toni Sacconaghi said.

At least 13 brokerages raised their price targets on the stock, with Citigroup making the most bullish move by raising its price target by US$30 to US$200.

Of the 37 analysts that track the stock, 31 had a “buy”, or higher rating. None had a “sell”.

With the latest brokerage actions, at least nine Wall Street analysts now have target prices that put Apple’s market value above US$1 trillion. Drexel Hamilton’s Brian White is still the most bullish among Apple analysts, raising his target price further to US$235.

Apple’s fourth-quarter results underscored the company’s ability to drive growth not just on iPhones, but across its range of products, analysts said.

The company’s suite now includes five different iPhone models, the iPad, the Mac and the Apple Watch as well as its fast-growing services.

Apple said it sold 46.7 million iPhones in the fourth quarter ended September 30, above analysts’ estimates of 46.4 million, according to financial data and analytics firm FactSet. Mac and iPad sales too were above the estimates of most analysts.