Apple Inc. (NASDAQ:AAPL) could see upside to iPhone 6 shipment estimates thanks to stronger-than-expected production and a mix shift toward the more expensive iPhone 6 Plus. In fact, analysts at Susquehanna Financial Group think it’s possible that Apple will even sell through all of the iPhone 6 units it produces in the second half of this year.
Not all analysts are so bullish on Apple right now though, as Deutsche Bank downgraded the company’s stock from Buy to Hold this week.
Apple suppliers keep up with iPhone 6 demand
In a report dated Oct. 7, 2014, Susquehanna analysts Chris Caso and Liz Pate said their latest checks of Apple’s supply chain suggest that suppliers are producing more iPhone 6 Plus units than they were previously estimating.
As a result, they think that their previous production estimates have fallen well behind the actual iPhone 6 Plus production rate. They say production constraints for the bigger iPhone screens, combined with strong demand, appears to have boosted production rates.
The Susquehanna team has now increased their estimates and their price target, bringing it from $115 to $120 per share. The analysts also reiterated their Positive rating on Apple stock.
Adjusting iPhone estimates
The Susquehanna team said they’ve increased their iPhone production estimate to between 100 million and 110 million units in the second half of this year. That’s compared to their previous estimate of approximately 100 million units, which was from before the iPhone 6 and 6 Plus were launched.
The analysts have also increased their iPhone shipment estimates for the second half of this year. They now expect 38 million units in the September quarter and 61 million in the December quarter. That’s compared to their previous estimates of 37 million and 58 million, respectively.
Upside seen for Apple
The analysts said their iPhone unit estimates for the second half of this year are pretty close to what the rest of Wall Street expects. Because of the higher-than-expected production estimates, they see “modest unit upside” as being possible.
However, they think product mix will be the bigger upside driver. They say upside in iPhone 6 Plus production could mean that Apple moves more of the more expensive model than previously expected. The analysts believe consensus estimates for iPhone 6 sales are “far too conservatives” based on their new mix assumptions. If Apple beats estimates by a meaningful margin, that could serve as a catalyst for the company’s stock.
