Ahead of the release of its quarterly earnings later this month, demand for the new Apple iPhone is "robust," with one analyst noting it has exceeded his best-case scenario.
Wedbush Securities analyst Dan Ives, who rates shares of Apple “outperform” with a $160 price target, noted that demand for the iPhone 12, which was announced in October, is exceptionally strong and the hype surrounding the device is meeting reality.
"Our TMT Asia supply chain checks for iPhones continue to be incrementally bullish around iPhone 12 5G demand and have now exceeded even our 'bull case scenario' for units in FY21 given the current trajectory, a major positive for shares with December results around the corner on January 27th," Ives wrote in a note to investors. "We believe Apple saw a robust holiday season not just on iPhones, but also had a strong AirPods performance that will be another product tailwind for Cook & Co."
Shares of Apple were slightly higher in early Wednesday trading.
As part of the iPhone 12 supercycle, Ives noted that strong demand in China is key for the Tim Cook-led Apple, which he believes accounts for roughly 20% of the iPhone upgrades.
"To this point, we are seeing considerable strength from the China region thus far with positive trends heading into 2021," Ives added. "In a nutshell, while services growth remains the key to the Apple re-rating story over the past six months, the hearts and lungs of the Apple growth story are built around iPhone installed base upgrades."
He added that if Apple continues to execute as it has done with the iPhone 12 product lineup, as 40% of the installed base has not yet upgraded, a $3 trillion market cap "could be on the horizon over the 12 to 18 months."
Apple is slated to make a "big announcement" on Wednesday, though it is not a new product. FOX Business will be covering the announcement.