BofA: These Apple suppliers will make a big impact when the iPhone 16 series launches
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Tech giant Apple is expected to unveil its new iPhone later this year, and Bank of America has identified several stocks that will benefit from the smartphone’s development. “After smartphone demand stabilizes, we are positive on Apple’s supply chain as we expect material design changes and AI features to drive a more sustainable uptick over the next 2-3 years,” the investment bank’s analysts wrote in a June 26 research note. They expect between 90 and 100 million units of the iPhone 16 series to be in stock in the second half of this year – slightly more than last year’s 90 million units. There has been much speculation about the functionality and look of the next iPhone. Renowned Apple analyst Ming-Chi Kuo expects a larger screen and periscope camera on the iPhone 16 Pro, while analyst Ross Young also said he expects larger screens. Referring to past cycles, BofA analysts noted that stocks in Apple’s supply chain “generally performed better before product launch,” while their post-launch performance “depends on product specs/pricing versus consensus, delivery, and also expectations for next year’s new iPhone.” Here are some of BoA’s highest buy-rated stocks to keep an eye on as the iPhone continues to evolve: Hon Hai Precision Taiwan’s Hon Hai Precision Industry – the world’s largest contract manufacturer of electronics – is one of the names on BofA’s list. The company is also known as Foxconn and assembles consumer products such as Apple’s iPhones. “A solid iPhone replacement cycle and a spec upgrade should help HH deliver better revenue/earnings in 2025-26,” the investment bank’s analysts wrote. Hon Hai shares trade on the Taiwan Stock Exchange and in the U.S. as American Depository Receipts (ADRs). Shares are on an uptrend, gaining nearly 116% year-to-date. BofA raised its price target on the stock to 260 New Taiwan dollars ($7.98) from 200, implying an upside of around 15.3%. Foxconn Industrial Internet Foxconn subsidiary Foxconn Industrial Internet, which makes iPhone cases, is also among BofA’s favorites. The bank expects strong margins for the China-based design and manufacturing giant as demand for its cases rises in parallel with better iPhone supply cycles between 2025 and 2026. “We are increasing Foxconn Industrial Internet (FII) earnings for 2024-26E by 2-6% on potentially better iPhone case sales and strong contribution from AI servers,” the analysts wrote. Foxconn is dual-listed on the Shanghai and Taiwan stock exchanges. Its shares also trade as ADRs in the U.S. Its Shanghai-listed shares have risen 91.8% year-to-date. BofA has a 12-month price target of 33 Chinese yuan ($4.54) on the stock, giving it an upside of around 13.8%. Luxshare Precision BofA is bullish on Chinese electronics maker Luxshare, “a key beneficiary” of a stronger iPhone cycle. This is “due to its high exposure to various iPhone components (acoustic, haptic, wireless charging, cable connector, top/rear module, LCP antenna, etc.) as well as continued market share gain in iPhone assembly (26%/30% share in 2024/25E vs. 21% in 2023),” the bank’s analysts wrote. As such, they expect Luxshare’s earnings to rise 3% between 2025 and 2026 due to “potentially better consumer business and continued market share gains in iPhone assembly.” Luxshare’s shares are listed on the Shenzhen Stock Exchange and are also included in the KraneShares CICC China 5G & Semiconductor Index ETF (6.2% weight). BofA raised its price target on the stock from 39 to 46 Chinese yuan, representing an upside potential of around 11.1%. BYD Electronic Also on BofA’s radar is BYD Electronic, which it said will benefit from the consolidation of its iPhone casing business. “We expect BYDE’s casing profitability to gradually improve due to better operating efficiency (higher automation rate, improved return),” the analysts wrote. They raised the company’s 2025-2026 earnings expectations by 2% to reflect “potentially better iPhone volumes, robust auto expansion as well as rising AI-related contribution (servers, robots).” Shares of BYD Electronic, majority owned by auto giant BYD, are listed on the Hong Kong Stock Exchange and as an ADR. BofA has set a price target of 42 Hong Kong dollars ($5.38) on the stock, implying 25.3% upside. — CNBC’s Michael Bloom contributed to this report.
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