Apple Inc. (NASDAQ:AAPL) is not expected to increase the size of the iPhone screen before 2014 according to Barclays. However, Barclays believes that Apple Inc. (NASDAQ:AAPL) will be launching new products in the near future.
The analysts believe we are within 6 months of Apple’s next product initiatives in iPads and iPhones. Barclays thinks that Apple is currently making moves that will include international carrier expansion, new iPhones (and eventually a bigger screened version in 2014). By September 2013 they expect the company to introduce both a lower cost (but high quality) iPhone 5 with a plastic case as well as an ‘iPhone 5S’. Even before that launch, we could see further international expansion for the iPhone with NTT Docomo in Japan (60 million subs).
Barclays also believes that Apple will launch a retina display iPad mini in September, which could come with a redesigned 9.7” iPad and lower prices for the existing minis. Later this summer, they expect the lower end iPhone to be available globally but be more popular in emerging markets. This product should be priced in the mid tier range – likely at the higher end of the $250-$350 price band.
With regard to the iPhone 5S, Apple would be reusing a previous platform and leverage the manufacturing efficiencies it has finally gained with the iPhone 5. The key feature of the 5S needs to be finger print authentication – which could eventually be used in a secure payments system. Along with the release of new phone models, theiPhone is set for further expansion in Asia with the iPhone likely to finally be available with China Mobile (700M subs) by the end of the September Quarter.
Barclays recently adjusted their Apple Inc. (NASDAQ:AAPL) estimates lower based on the belief that new products are more second half loaded in C2H13 – and the first half of C13 is more competitive. For the March quarter, the firm forecasts iPhone unit sales will decline 27% q/q to 35.0 million. They estimate a decline in shipments in fiscal 3Q13 with iPhone units down 14% q/q to 30 million. For full year FY13 estimates are for iPhone unit sales to grow 21% y/y to 150.8 million.
For the March quarter the analysts adjusted iPad estimates to account for weakness in larger iPads and seasonality. They estimate total iPad unit sales (combined iPad and mini) will be -21% q/q with 18.0 million units in sales for the March quarter. Barclays is predicting a recovery in shipments in fiscal 3Q13 with iPad units up 6% q/q to 19.0 million given new products. For FY13, Barclays estimates that Apple will grow iPad units 46% y/y to 84.9 million.
Barclays believe that Apple Inc. (NASDAQ:AAPL)’s shares are close enough to the new announcements to begin anticipating improvement within 6 months – even with the prospect of below-consensus fiscal 3Q (June) revenue and EPS guidance. Another catalyst is that Apple may be readying a major increase to its shareholder return program.
The firm has a price target for Apple Inc. (NASDAQ:AAPL) of $530 using an 11x multiple on FY14 EPS estimate of $48.92.