Strong demand for Apple's (NASDAQ:AAPL) iPhone 6 smartphones should continue through the rest of the year, Canaccord Genuity analyst Michael Walkley predicted in a research report Sunday.
Walkley reiterated his buy rating on Apple stock and raised his price target to 160 from 155, based on iPhone sales momentum continuing.
Apple stock was down a fraction, near 127, in afternoon trading on the stock market today.
"Apple dominated the high-end global smartphone market during (the first quarter) with near-record share of industry profits and ongoing market share gains," Walkley said. "In fact, we believe Apple's strong fiscal Q2 results and fiscal Q3 guidance are consistent with our surveys and analysis indicating a very strong iPhone 6 upgrade cycle should continue through calendar 2015."
Only 20% of iPhone users have upgraded to the bigger-screen iPhone 6 series handsets, he said. That creates an opportunity for a continued strong replacement cycle, Walkley said.
Apple also is continuing to gain share in the high-end smartphone market from Google (NASDAQ:GOOGL) Android-based handsets, Walkley said.
"We believe these trends should grow the iPhone installed base to over 500 million users exiting calendar 2015, and this bodes well for future strong iPhone replacement sales, earnings, as well as cash flow generation to fund strong long-term capital returns programs similar to the $200 billion program announced on April 27," Walkley said.
Walkley predicts that the iPhone installed base will reach 505 million by year-end, up 26% from 2014. Exiting 2018, Apple could have 665 million iPhone users, representing 40% of the expected 1.67 billion global premium smartphone subscribers, he said.
In Q1, Samsung regained its position as the No. 1 smartphone vendor worldwide. Samsung shipped 83.2 million smartphone units, compared with Apple's 61.2 million units. But Apple's average sales price for the iPhone was $665, vs. $198 for Samsung's handsets, including feature phones.
iPhone inventories 'extremely lean'
Meanwhile, Pacific Crest Securities said Apple is seeing good iPhone demand trends in the June quarter.
"Our handset checks indicate continued healthy demand trends for both the iPhone 6 and 6 Plus, with inventories remaining extremely lean due to controlled supply," Pacific Crest analyst John Vinh said in a note Sunday. "As iPhone demand has been able to hold up for the past few months, we believe it will track better than seasonal in Q2.
"(Pacific Crest) Apple analyst Andy Hargreaves estimates iPhone shipments at 47 million for Q2."
The research firm's monthly carrier surveys indicate that initial demand for Samsung's newest flagship smartphones, the Galaxy S6 and S6 Edge, has been "better than feared."
Samsung also is keeping lean inventories of the S6 series, Vinh said.
Apple's March-quarter earnings crushed expectations thanks to iPhone sales.
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