Apple’s Move Into AR/VR Impresses BofA

Apple on Tuesday (Dec. 14) got an upgrade price target boost at Bank of America up from $160 to $210 after the tech giant announced its shift into augmented and virtual reality with a new headset expected to be released by the end of 2022 or early in 2023, according to a Seeking Alpha report.

Analyst Wamsi Mohan calls the anticipated Apple AR/VR headset a “game-changer” that will lead to new applications that require high-performance hardware, the report says. Mohan also expects Apple to make several sweeping changes in its next iPhone upgrade cycle in fiscal 2023 and sees AR as the “killer app” for 5G-equipped phones.

BofA’s upgraded price target also stems from an expectation of increase service revenue, Apple’s ability to charge a high price for the AR/VR headset, a higher earnings multiple ahead of its product launch, capital return to the company’s shareholders and manageable legal risks.

Apple’s below-par financial performance for most of 2021 “suggests cycle risks of iPhone 13 are well understood,” said Mohan. Apple’s shares have ticked up almost 36% this year.

Mohan expects investors to place a higher earnings multiple on Apple’s stock when the launch of its AR/VR headset gets closer next year, particularly three to six months ahead of its official launch date.

Loup Ventures analyst Gene Munster said Monday he believes Apple’s “best days are yet to come,” adding that the tech giant sits “at the cusp of another reinvention.”

Related: Apple Closes in on $3T Valuation

Apple Inc. on Monday (Dec. 13) inched closer to reaching $3 trillion in market value, according to multiple reports, which would make Apple as large as the world’s fifth-largest economy behind Germany, PYMNTS reported.

The company’s goal of reaching the $3 trillion threshold comes a little more than a year after Apple reached $2 trillion. Apple reached the $1 trillion mark in 2018. Microsoft, Alphabet and Tesla have also reached the $1 trillion benchmark.

Apple briefly lost its position as the world’s most valuable company to Microsoft earlier this year, when CEO Tim Cook made comments about the company’s supply chain struggles and its challenges to obtain enough materials to make iPhones, iPads and other products.