CLSA: Raises Apple price target to $405, iPhone Duo shipment outlook more optimistic than expected

CLSA issued a research report stating that the shipment outlook for Apple's foldable iPhone Duo is more optimistic than most market expectations, and is expected to support product revenue and the blended average selling price of iPhone, as well as help better defend margins amid rising memory costs. The bank maintained its "Outperform" rating on Apple and raised its target price from $355 to $405. The bank expects foldable phone shipments of 35 million units in fiscal 2027 and 38 million units in calendar 2027, far above IDC's forecast of 10.2 million units; it also assumes that about 75% of first-year demand will come from cannibalization of existing iPhone users, but revenue still has room for growth, and margins will also be better than expected. On the other hand, service revenue forecasts were cut by 4% due to slower growth in paid subscriptions; the bank believes service growth should focus more on advertising rather than paid subscriptions. The bank noted that after including the upward revision for foldable phones, revenue forecasts for fiscal 2027 to 2028 were raised by 7% to 8%, while earnings forecasts were raised by 2% to 2.4%, still 7% to 8% above overall market expectations.