Analyst says up to 1.4 billion Android users could switch to iOS because of one new 5G iPhone

JP Morgan pays its equity analysts millions of dollars a year to give its clients solid advice on which stocks to buy, when they should be bought, and when they should be sold. Most of these recommendations are based on what is called fundamental analysis which essentially is a deep dive into a company's business, its products, and the supply-demand equation for these products.

Technical analysis uses charts to help investors detect any change in the stock itself that might tip off an investor to a coming rally in the shares. Most big banks like JP Morgan stick to the fundamentals because huge investors (like mutual funds and other institutions) don't want to invest millions or billions of dollars based on what they see as something akin to reading tea leaves.

So JP Morgan's analysts studied Apple (as every major investment bank must) and yesterday told its clients that the rumored iPhone SE (2022) could lead as many as 1.4 billion Android users to switch to the iPhone and iOS. These are Android users with low-to-mid-range handsets made by companies like Samsung and Huawei. Additionally, 300 million older iPhone handsets could be replaced by the new iPhone SE (2022) mostly due to the latter model's support of 5G.

According to Reuters, JP Morgan's 5-star analyst Samik Chatterjee (rated by Refinitiv Eikon for his accuracy in forecasting quarterly earnings) said, "Apple's trade-in program for non-iPhones is admittedly not as attractive as the iPhone trade-in values, it could nonetheless lead to an average starting price range of $269 (roughly Rs. 20,400) to $399 (roughly Rs. 30,200) for the 5G iPhone SE, which is still very competitive."

The version of the iPhone SE expected during next year's first quarter will be a refreshed version of the iPhone SE (2020) which is based on the iPhone 8. This means that it will feature a 4.7-inch LCD display and sport the Touch ID home button. Besides adding 5G support, the new model will have a more powerful A14 Bionic or A15 Bionic, the chipsets that power the iPhone 12 line and iPhone 13 line respectively.

The next big change to the iPhone SE could take place in 2023 when a version based on another iPhone model (perhaps the iPhone X) might be released, That model could include Face ID, an AMOLED display, and the notch.

The report sent to JP Morgan clients included an estimate of how well the new phone will do in the marketplace. The firm says that it expects Apple to sell 30 million iPhone SE (2022) units next year and sees Apple shipping 250 million handsets for 2022. That would be a 10 million unit addition to the number that it will ship this year.

According to one source, there are over 2.5 billion active Android users in over 190 countries. Thus, JP Morgan's report is saying that a whopping 56% of Android users could switch to iOS thanks to the iPhone SE (2022). Besides 5G support, these Android users considering a switch might be attracted by the price of the iPhone SE which currently starts at $399 (although there are 5G Android models available for less).

JP Morgan also notes that demand from consumers for 5G is strong and it has raised the target price for Apple to $210 from the previous $180. Currently, the stock is trading at $174.41 as the tech giant closes in on a $3 trillion valuation. With a market capitalization (stock price multiplied by shares outstanding) at $2.86 trillion, Apple's valuation is $140 billion shy of the $3 trillion mark.

A 4.8% rise in the stock price to $182.85 should be enough to do the trick. Apple reached the one trillion mark in August 2018. Two years later Apple reached a valuation of two trillion and is now closing in on the three trillion mark. It took 42 years for Apple to be worth $1 trillion, another two years for it to tack on another trillion in value, and it looks like it will take less than a year and a half for the next trillion in valuation to be added.