2023 has been a rewarding year for Apple (AAPL 0.04%) investors as the stock has soared 42% so far, driven by the resilience of the company's iPhone sales, which continue to defy the crash in the broader smartphone market. Shares of the technology giant now sit at 52-week highs following their impressive rally.
Investors may now be asking themselves if Apple stock has room to run higher and deliver more upside over the next year. According to a consensus of 38 analysts covering Apple, the stock has a median price target of $189 for the next 12 months. That's the level Apple is trading at right now, suggesting that there may not be more upside on offer. However, the high price target from analysts of $220 a share indicates that Apple could jump 17% over the next year.
Does Apple have what it takes to hit the top price target price set by Wall Street analysts? Let's find out.
NASDAQ: AAPL
Key Data Points
Apple's growth is expected to accelerate over the next year
The iPhone is Apple's biggest source of revenue. The device produced 55% of Apple's revenue in the first six months of fiscal 2023 (ended April 1), generating $117 billion in sales over the past couple of quarters. The company's iPhone 14 series thrived during difficult times, pushing Apple's iPhone average selling price (ASP) to $988 in March 2023 from $882 in the same period last year.
It is worth noting that Apple's iPhone shipments were down just 2% year over year in the first quarter of 2023 when the overall smartphone market was down nearly 15%. This suggests customers are willing to open their wallets for iPhones, which is exactly where the opportunity lies for Apple.
The company started ramping up the production of its next-generation iPhones, which are expected to hit the market in September this year. Supply-chain rumors suggest that Apple is going all out to ensure that there is no shortage of supply when its new iPhones come out. One report suggests that the company procured double the number of panels in June and July this year as compared to the same time last year when the iPhone 14 models went into production.
On the other hand, noted Apple analyst Dan Ives of Wedbush Securities points out that the upcoming iPhone models could see tremendous demand thanks to an installed base of 250 million iPhones that haven't been upgraded in four years. Throw in the fact that Apple is expected to raise prices when it releases its next-generation smartphones, the company is likely to benefit from a combination of strong volumes and higher ASPs.
Additionally, Apple could get a boost from its recently announced Vision Pro mixed-reality headset. Priced from $3,499, this headset will hit the market early next year, and market research firm TrendForce says that Apple could ship 200,000 units of this device. This could translate into an additional $700 million in revenue, at least.
Also, the Vision Pro could give Apple's services business a shot in the arm since the company is developing an ecosystem of apps for the device to help users make the most of it. According to Apple, the "Vision Pro has an all-new App Store where users can discover apps and content from developers, and access hundreds of thousands of familiar iPhone and iPad apps that run great and automatically work with the new input system for Vision Pro."
All this explains why Apple's growth is expected to pick up nicely in fiscal 2024 (which will begin in October 2023).
Stronger growth could lead to more upside
Analysts are forecasting a 2% decline in Apple's revenue in the current fiscal year to $385 billion. However, the company's revenue is expected to jump 6.5% in fiscal 2024 (which will end in September 2024) to $410 billion. The company's earnings are expected to jump 10% to $6.57 per share in fiscal 2024 following a decline in the current one.
An improvement in Apple's growth could translate into a stronger stock-price performance over the next year, so it won't be surprising to see the tech giant achieve the Street-high price target referenced above.
