Apple’s Next Product Sees Strong Demand
A massive sell-off in Apple Inc. (NASDAQ:AAPL) following the company’s fourth-quarter earnings put a significant dent in AAPL stock. But Bank of America Merrill Lynch is seeing nearly 40% upside at current levels.
Bank of America (BofA) has revealed the result of a survey, which strongly questions the bearish narrative on AAPL stock.
Apple stock dropped below $100.00 on fears that its crown jewel—the “iPhone”—is facing a slowdown in sales growth. However, BofA’s latest survey should provide some solace to Apple bulls.
Bank of America carried out a survey to gauge the demand for Apple’s biggest launch later this year. The bank directly reached out to potential customers for first-hand information. The survey had a sample size of 1,000 respondents across varying demographics. (Source: “Apple (AAPL) ‘Buy’ Rating Reiterated at BofA as Survey Hints at Strong iPhone 7 Cycle,” Street Insider, February 8, 2016.)
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The survey asked the respondents whether they would upgrade to the new iPhone. A good 42% of the respondents said they intended to upgrade to the “iPhone 7,” which is expected to hit the market by September of this year.
It is interesting to note here that some of these respondents already hold one of the newer versions of the iPhone. Nearly half of these respondents who showed intent to upgrade currently own an “iPhone 6” or “iPhone 6 Plus,” while more than a quarter currently own an “iPhone 6s” or “iPhone 6s Plus,” the latest version to the hit the market.
Additionally, of the respondents who own the older iPhone 5s, 49% showed intent to purchase the iPhone 6s or 6s plus, while 21% said they are waiting for the iPhone 7.
Bear in mind that Apple is expected to launch another iPhone at its March event next month. The demand for the rumored “iPhone 5se” might be affected by the expected iPhone 7 launch later this year. Nonetheless, the survey confirms that Apple’s biggest revenue-driver still enjoys better-than-expected demand.
Bank of America Merill Lynch is reaffirming its bullish stance on AAPL stock, setting a $130.00 price target. The stock is currently trading at a 38% discount from this price.