Apple Inc. iPhone Estimates Cut By Some, iPhone SE To Help India

Apple is due to release its March quarter earnings report next month, and analysts just keep cutting their iPhone sales estimates. One firm trimmed their price target on the iPhone maker due to their estimate cuts, while another says the supply chain data isn’t as bad as they expected. A third says iPhone sales are slow due to seasonality around the Chinese New Year and is looking forward to the release of the rumored 4-inch iPhone SE, which he thinks will help the company in developing markets and with consumers elsewhere who just want an updated iPhone at a lower price.

Apple Monitor shows slow sales due to seasonality

Drexel Hamilton analyst Brian White, the perennial Apple bull, reports that most of the Apple suppliers in his Apple Monitor reported weaker February sales than the 11-year average but in line with declines for the last three years at a month over month decline of 35%. He noted that even last year with the exceptionally strong iPhone 6 and 6 Plus launch, February sales for his Apple Monitor declined 37%. Further, he said his Monitor showed the strongest results for January in eight years and emphasized that the timing of the Chinese New Year likely weighed on sales.

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White is also looking forward to the expected March 21 event, at which the company is expected to unveil an updated 4-inch iPhone called the iPhone SE, and his research in China supports the view that Apple is indeed working on an updated 4-inch phone. Such a phone would help the company target consumers who want a smaller screen with updated features but a lower price point compared to the other new models. He also thinks it could be a big help as Apple moves into India, which he expects in the next year to year and a half.

Supply chain data not as bad as expected

Credit Suisse analyst Kulbinder Garcha is also firmly in the bull camp as he emphasized signs of stabilization within the iPhone maker’s supply chain. He thinks things might be better than expected and that the improvement might be “first positive movement” since the company started cutting iPhone orders last year. He’s increased his estimates and said his checks suggest that near term builds are stabilizing at 40 million to 45 million for the March quarter.

He added that his analysis of the iPhone installed base suggests a more than 35% increase last year, bringing it to about 600 million. By the end of next year, he expects it to be at 715 million and predicts more growth from Apple’s iPhone Upgrade Program, which he expects to accelerate the upgrade rate and push units higher.

Apple price target trimmed by CLSA

CLSA analysts Avi Silver and Chang Liu lowered their estimates due to a cut in their smartphone model unit estimates, a shift in the release of the Apple Watch 2.0 (which was previously expected this month but has been pushed back) and “generally slower” adoption of the watch. As a result, they’ve trimmed their price target on Apple stock from $130 to $128 per share.

Shares of Apple are up 0.44% at $101.56 as of this writing.