iPhone 7 Event: What Wall Street Expects – AAPL

iPhone 7 Event: What Wall Street Expects – AAPL
Image Credit: Apple Inc.

Expectations for tomorrow’s iPhone 7 event are running very low, but nonetheless, there’s plenty of chatter about how much Apple might disappoint fans. On the flip side, it should be pretty easy for the company to wow tech watchers and Wall Street.

Most important iPhone 7 update

It’s widely expected that the iPhone 7 will have the same form factor as the iPhone 6s and that the next big change won’t come until next year when the iPhone 8 is expected (rather than iPhone 7s). Despite this disappointment, the ever-optimistic Apple bull Brian White of Drexel Hamilton expects the iPhone 7 to be a “solid upgrade. He also expects the company to return to unit growth starting in the second fiscal quarter, which shouldn’t be hard considering that the iPhone 6s is giving it such easy comparisons.

Last week, the analyst suggested that Apple may have just gotten a lucky break, courtesy Samsung. Reports about the Galaxy Note 7 exploding and catching fire began appearing, and Samsung ended up having to stop shipments of the phone. The company also issued what he sees as “effectively a recall of the new device.” White believes the timing of this event is creating a better setup for Apple going into the iPhone 7 launch because suddenly consumers will be looking for new smartphones. Not only that, but Apple would be drawing from Samsung’s customers, thus increasing its market share—if it benefits from the explosiveness of the Galaxy Note 7.

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The most important and irritating iPhone 7 updates

White sees the most important new feature on the iPhone 7 Plus as the rumored dual camera with optical zoom. He believes consumers could be convinced to upgrade to Apple’s most expensive phone because of how important it has become to have a great camera to take photos and video and share them on social media. He also notes that Apple might include a better HD Retina display and a larger front-facing lens for improved selfies.

The analyst concurs with the rumors that Apple will ditch the headphone jack for the iPhone 7 line, citing his own research in Asia. He expects the company to instead use the Lightning connector to connect headphones. White notes that this decision will likely be met with contention at first (and already is, in fact, even though this is still only a rumor), but he believes fans will come around and that it will “soon be forgotten.”

He also points out that dumping the headphone jack will provide more room for another speaker, which will improve sound quality.

Other expectations for the iPhone 7

He also predicts that the storage options for the iPhone 7 line will be bumped up from 16GB to 32GB on the bottom end and from 128GB to 256GB on the high end. White’s research also suggests that the white antenna lines on the back of the iPhone 6s will go around the edge of the iPhone 7 and 7 Plus. Further, he believes Apple is adding a black color option this year and will utilize a faster A10 chip.

BMO analysts add waterproofing and Lightning headphones included in the box with the phones as possibilities. They also suggest that Apple will offer Bluetooth headphones and adapters for Lightning to 3.5mm connectors.

RBC Capital analysts are looking for AirPods, a pressure sensitive home button and faster LTE connectivity as well.

Other possibilities for the iPhone 7 event

In addition to the iPhone 7 lineup, Wall Street is generally expecting an update to the Apple Watch tomorrow, with RBC analysts predicting that GPS will make it more independent. The smartwatch is nearly two years old, so an update is widely seen as being overdue. The RBC team believes adding GPS will improve the watch’s “fitness functionality” and look for a faster processor and improved battery life.

Overall, analysts generally see it as being very easy for Apple to surprise to the positive tomorrow because of how low expectations are. Shares of Apple stock edged lower by as much as 0.18% to $107.92 during regular trading hours on Tuesday.

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