Vogt says his fresh price target captures a “long-term and stable iPhone demand” with higher average selling price, adding that it reflects the “true” option value of Apple’s possible entry into the auto market.
“Our investigation of the auto industry and Apple’s investment into the industry (with LiDAR patents and self-driving licenses) suggests that Apple’s auto optionality is possibly worth at least $14 per share,” Vogt said in a message to clients. “Apple’s portfolio right now gives significant cash to the company that they will use to enter the battery EV market.”
Vogt predicts that Apple can capture a portion of the battery electric vehicle market due to customer satisfaction already being high for their other products.
“We believe Apple’s strategy and market domination in the smartphone and PC markets should allow them to introduce a BEV and get at least a 5% market share,” he wrote. “Over ten years, we predict the automotive market will likely be nearly 100% EV creating up a 90 million unit sector to new participants with large bases of loyal customers like Apple.”
While Apple is not the first innovative company in the sector, the analyst says the company’s resources should help the company to become a “fast follower”.
“Our founding case assumes Apple gets 8% of the global EV market within 10 years with margins nearing 15%,” wrote Vogt.
On Wednesday Apple was up by 2%. Ytd, shares are lower by 7% as some investors have moved away from tech and into value and cyclical stocks.
Author: Scott Dowdy