Barclays Capital still believes Apple Inc.'s (NASDAQ: AAPL) iPhone is well positioned to grow faster than the smartphone market over the long-term. The brokerage reiterated its overweight rating on shares of Apple with a price target of $465.
Ahead of Barclays Capital’s 12th annual Global Communications, Media and Technology Conference in New York, our Wireless team raised its handset estimates -- including those for smartphones. According to our colleague, Jeff Kvaal, continued emerging market penetration and growing smartphone usage globally are the dominant drivers of market growth, said Ben Reitzes, an analyst at Barclays Capital.
Reitzes said given a better-than-expected first quarter coupled with the view of the sustainability of the above market drivers over the next one to two years, the wireless team raised its global handset and smartphone estimates for 2011-2014.
The new forecast includes global handset unit volumes of about 1.6 billion in 2011 (was 1.5 billion), representing a growth of 10 percent year over year -- with the market growing to over 1.9 billion by 2014. Reitzes said the forecast for 10 percent unit growth for 2011 is reflective of healthy ongoing handset demand and a less dramatic impact from the disaster in Japan than initially feared.
Reitzes said within smartphones, the team now forecasts 420 million units in 2011 (was 410 million), representing growth of 49 percent year over year -- with the market growing to 851 million units by 2014.
We continue to believe Apple is well positioned to grow faster than the smartphone market over the long-term given its innovation in software, the need to add more carriers, its leading number of Apps available and its upcoming new services, said Reitzes.
For example, Reitzes sees the new iCloud service (to be introduced by second half of 2011) and a mobile payments network (likely a fiscal 2012 event) as potential catalysts for increasing the utility of the iPhone.
Reitzes estimates Apple will sell 16.6 million iPhones in calendar second quarter (up 98 percent year-over-year), 70.5 million for fiscal 2011 ending September (up 77 percent year-over-year), 92.5 million for fiscal 2012 (up 31 percent year-over-year) and 115.2 million for fiscal 2013 (up 24 percent year-over-year).
On a calendar year basis, Reitzes estimates Apple will ship 79.75 million iPhones in calendar 2011 (up 68 percent year-over-year) and 99.9 million in calendar 2012 (up 25 percent year-over-year).
Reitzes believes that Apple could see sales surge in the December quarter of this year with a new product and with the most upside likely in fiscal 2012 with a major iPhone upgrade for 4G networks.
Apple shares closed Tuesday's regular trading down 0.66 percent at $332.19 on the NASDAQ Stock Market, while in the after-hours the stock moved down 0.12 percent to $331.80.