A new survey suggests that a growing percentage of consumers plan to upgrade their smartphones in the year ahead. That bodes well for iPhone sales and Apple stock, a Wall Street analyst says.
A BofA Securities survey of consumers in the U.S., U.K., China and India shows a higher intent to upgrade smartphones this year, BofA analyst Wamsi Mohan said in a note to clients Thursday.
The survey results suggest that "interest in upgrading iPhones has recovered from Covid-19 lows," he said. "As we come out of the global pandemic, replacement cycles are re-normalizing."
In the January survey, 30% of respondents said they plan to upgrade their smartphones on an annual basis. That's higher than the 23% level recorded in March 2020 at the start of the Covid pandemic. However, it's still below the 32% level from December 2019 before the pandemic.
"Overall intent to upgrade to an iPhone has been trending positively with a corresponding drop in intent to purchase competitor phones," Mohan said. "Customer loyalty for Apple remains strong with 67% of current iPhone users intending to buy an iPhone during their next upgrade, which compares to 55% for Samsung, 49% for Huawei and 37% for Xiaomi."
Mohan rates Apple stock as buy with a price target of 215.
Apple Stock In Cup-With-Handle Base
On the stock market today, Apple stock fell 2.1% to close at 168.88. Stocks were down across the board on Thursday.
The survey showed that 5G wireless was a more important driver of upgrade intent in China and India than in the U.S. and U.K.
The online survey had a sample size of about 540,000 participants across China, India, U.K. and U.S.
"More than 25% of respondents globally still have old iPhones (iPhone 8 or earlier) and we see this as an opportunity for driving a replacement cycle," Mohan said. The iPhone 8 came out in September 2017.
Apple stock has formed a cup-with-handle base with a buy point of 176.75, according to IBD MarketSmith charts.
Apple stock has an IBD Composite Rating of 94 out of 99, according to IBD Stock Checkup. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
