Bank of America: Apple may benefit from U.S. carrier promotions Maintain $185 price target

Apple (NASDAQ:AAPL) (AAPL.US) is likely to benefit from an attractive promotion by the U.S. telecom company, which is encouraging people to upgrade to the newly released iPhone 14 series smartphones, Bank of America said on Wednesday. Bank of America analyst Wamsi Mohan has a "buy" rating on Apple stock and maintains a price target of $185.

Given that new iPhones are often bundled with financing plans, these incentives are making new iPhones more affordable, sometimes even making them free through certain trade-in events and certain select plans, Wamsi Mohan noted.

In addition, payment plans for the new iPhone 14 series will be split up to be completed over 36 months, which may require up to $100 (or up to $255 including Apple Care) in upfront payments under certain unlimited traffic packages and multi-year contract maintenance.

Customers of U.S. telecom giant T- mobile (TMUS.US), as well as Sprint, are able to have 24-month installment plans, while the other two U.S. telecom giants, Verizon (VZ.US) and AT&T (T.US), offer installment plans of up to 36 months.

"Despite Apple raising iPhone prices in some regions, early pre-order trends indicate that Apple's new Pro models are hotter and taking longer to ship than last year." Mohan wrote in a report to clients, reiterating his Buy rating primarily because of the product cycle, service revenue growth, the company's ecosystem, strong returns on capital, and additional monetization opportunities from the company's user base.

Mohan also noted in the analysis that Verizon's promotions are the most differentiated, with the telecom giant accepting damaged devices with a $200 electronic gift card to the carrier's switch and "unlimited" plan services -- including Apple One for subscribers. -including Apple One subscriptions for subscribers, which include Apple Music, Apple TV+, iCloud+ and Arcade.

Mohan noted that despite the numerous promotions, telecom operators continue to benefit as customers are asked to join their unlimited traffic packages, which can be more expensive than other packages.