JPMorgan on Monday raised its price expectations for Apple 's stock and named Qualcomm a top pick heading into 2022. The firm said Apple, also a top pick for next year, is poised to outperform as it forecasts a stronger-than-expected iPhone product cycle. "We believe the focus on the iPhone 13 demand and supply situation is driving investors to underappreciate the relevance of the 5G iPhone SE to the FY22 product cycle ... implying in essence a stronger product cycle in FY22 relative to expectations earlier this year," JPMorgan's Samik Chatterjee said. JPMorgan hiked its price target on Apple to $210 from $180. The new projection implies 17% upside from Friday's close. The firm reiterated its overweight rating on Apple. With its 1.1% premarket gain Monday, Apple is now about $1.40 away from achieving a $3 trillion market cap, the first company to achieve that valuation level. The iPhone SE should drive consumers looking to upgrade or switch their devices, according to JPMorgan. Upgrading could result in 300 million units in sales while those switching to iPhones could comprise 1.4 billion units, the firm said. "iPhone SE will launch as an affordable 5G device in early 2022 allowing Apple to drive 5G share gains by addressing the underserved market," Chatterjee said. Apple shares have beaten the market year to date, adding 35% in 2021compared with the S & P 500's 25% gain. JPMorgan also identified Qualcomm as a top pick for next year and added the stock to the analyst focus list. The firm has an overweight rating on Qualcomm and a $225 price target on the stock, implying 22% upside from Friday's close. Qualcomm is best known as a supplier of wireless chips and processors for mobile phones but announced in November it had diversified its business. The semiconductor company supplies wireless connectivity chips for Apple's devices but forecasts it will only supply 20% of the modem chips needed for the 2023 iPhone. "We see QCOM shares well positioned for upside led by the growing strength and viability of Qualcomm's diversification strategy beyond smartphone modems into RFFE (RF front-end) and Compute and into additional end-markets of Auto, Consumer & Industrial IoT (internet of things), XR (extended reality), PCs, and Fixed Wireless," Chatterjee said in a separate note Monday. Plus, JPMorgan believes Qualcomm is trading at relatively cheap levels excluding Apple, leaving room for re-ratings and earnings upgrades. Qualcomm is up 20.7% in 2021, underperforming the S & P 500's 25.5% gain on the year. Shares rose 1.3% in premarket trading. —CNBC's Michael Bloom contributed reporting.
People wait outside an Apple store as the iPhone 12 series launches in Shanghai on October 23, 2020.
STR | AFP | Getty Images
JPMorgan on Monday raised its price expectations for Apple's stock and named Qualcomm a top pick heading into 2022.
