Small research firm disagrees with Bank of America call, upgrades Apple and predicts 25% rally

Published Thu, Sep 29 20227:34 AM EDT

Rosenblatt Securities on Thursday upgraded shares of Apple to buy from neutral, directly disagreeing with a rare downgrade from Bank of America. The small firm boosted its rating on the technology heavyweight and raised its price target to $189 from $160, implying that shares could spike more than 25% from current levels. Bank of America, in its downgrade, said it doesn't see Apple's stock continuing to outperform. This year, Apple has slipped about 15% but has outperformed the S & P 500's roughly 22% slump. In addition, Apple shares have jumped in the third quarter, rallying more than 9%. Survey call Rosenblatt's bullish call comes after a survey of more than 1,000 U.S. adults from the firm showed strong demand for Apple products, including the new iPhone 14 Pro Max and Ultra Watch. "Some 29% of respondents to our census representative survey of U.S. adults (which has a margin of error of 3% and was conducted Sept. 20 online via SurveyMonkey) said they already had or expect over the next 12 months to buy iPhone 14 -- including 33% of current iPhone owners and 18% of Android owners," analyst Barton Crockett wrote in a Thursday note. "This implies a 75 million base of people in Apple's home country who want this device." The survey results also showed that consumers want the pricier, new Apple models. Some 40% of respondents said that the iPhone 14 Pro Max was their top choice to buy, while the less-costly iPhone 14 Pro came in second, with 26% picking the phone as their top choice. There were similar results showing that demand is strong for Apple's new Ultra Watch, which has a base price of $799, according to the note. In addition, Apple's new features such as a capability to use satellites for emergency calls are resonating with consumers and show a considerable lead over competitors. "Consumers want it -- 42% in our survey said this feature was 'Very Appealing', 40% said 'Somewhat Appealing,'" wrote Crockett, adding that 38% said the feature made them more interested in buying iPhone 14. Production woes Crockett also noted a recent Bloomberg News report that said Apple was bailing on plans to boost new iPhone production. However, he said he's not worried. "Bloomberg's report yesterday that Apple was walking back previous guidance to suppliers for a modest bump to 2H22 production back to an original target of flat should be read in the context of consumers' clear preference for the pricier models with higher ASPs," he wrote. "There is also a recent history of comparable reports proving to be misleading when actuals come out." — CNBC's Michael Bloom contributed to this report.