Wedbush: Apple Stock Is a Buy Ahead of iPhone 13 Launch

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Apple (AAPL, $151.12) fanboys and AAPL stock bulls alike are amped for the coming launch of the iPhone 13. And Wedbush Securities says their enthusiasm is very much warranted.

Analyst Daniel Ives writes that recent supply-chain checks suggest a "normal" launch for the latest iteration of Apple's wildly popular smartphone, which he expects to drop in the third week of September.

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That doesn't sound like good news for AAPL. But between the global shortage of semiconductors and spread of COVID-19 Delta variant overseas, "normal," in this case, is extremely good news.

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Ives' Read on the iPhone

"Asia supply chain builds for iPhone 13 are currently still in the approximately 90 million unit range compared to our initial iPhone 12 reads at 80 million units (pre-COVID), and represent an approximately 10%-plus increase year-over-year out of the gates," Ives writes in a Tuesday note to clients.

Although the iPhone 13 build number "will clearly move around" over the coming months because of the global chip shortage, the analyst believes the data "speaks to an increased confidence with Apple CEO Tim Cook & Co. that this 5G-driven product cycle will extend well into 2022, and should also benefit from a post-vaccine consumer 'reopening environment.'"

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Fanboys will be happy to hear that Ives has increased confidence that the iPhone 13 will offer an "eye-popping" one-terabyte storage option. That's double the maximum storage capacity available in any previous iPhone model.

What It Means for Apple Stock

Apple bulls, meanwhile, should be pleased to know that the iPhone 13 remains the potential catalyst AAPL stock could probably use at this point.

Shares in Apple were up 13.9% for the year-to-date through Aug. 16, lagging the Nasdaq (14.8%), Dow Jones Industrial Average (16.4%) and S&P 500 (19.3%) over that span.

Although investors would surely like to see the world's largest publicly listed company beat the major benchmarks by year-end, let's remember: AAPL stock is nothing if not a long-term holding.

Just ask Warren Buffett, chairman and CEO of Berkshire Hathaway (BRK.B), and arguably the greatest long-term investor of all time. AAPL is by far Buffett's favorite stock, accounting for a whopping 41.5% of Berkshire Hathaway's total portfolio value as of June 30.

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Wall Street is firmly in the buy-and-hold camp as well. Of the 42 analysts issuing opinions on AAPL stock tracked by S&P Global Market Intelligence, 25 rate it at Strong Buy, seven say Buy, seven call it a Hold, one has it at Sell and two say Strong Sell. Their consensus recommendation comes to Buy, with high conviction, per S&P GMI.

The Street's average target price of $163.29, however, gives Apple stock implied upside of just 8% over the next year or so.

The bulls, naturally, expect much more from shares. As for Wedbush's Ives, he maintained his Outperform (Buy) rating, calling Apple "a top tech name to own." Meanwhile, the analyst's $185 price target gives AAPL implied upside of about 22% over the next 12 months.

"Our favorite large-cap tech name to play the 5G transformational cycle is Apple," writes Ives, "with the one-two punch of its massive services business and iPhone product cycle translating into a $3 trillion market cap for Cupertino in the next six to 12 months."

Apple's market cap was roughly $2.5 trillion as of Aug. 16.

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Dan Burrows is Kiplinger's senior investing writer, having joined the publication full time in 2016.

A long-time financial journalist, Dan is a veteran of MarketWatch, CBS MoneyWatch, SmartMoney, InvestorPlace, DailyFinance and other tier 1 national publications. He has written for The Wall Street Journal, Bloomberg and Consumer Reports and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among many other outlets. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange.

Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.

In his current role at Kiplinger, Dan writes about markets and macroeconomics.

Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.

Disclosure: Dan does not trade individual stocks or securities. He is eternally long the U.S equity market, primarily through tax-advantaged accounts.