Apple Inc. Stock Pops As Analysts Debate iPhone X Sales Mix

Apple Inc. Stock Pops As Analysts Debate iPhone X Sales Mix
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Apple Inc. (NASDAQ:AAPL) stock jumped on Tuesday after one analyst revealed the results of his firm’s survey of iPhone buyers, which suggests that the iPhone X mix was likely strong during the December quarter. However, another analyst from a different firm stated that iPhone X sales estimates seem too high, continuing the debate on reports from Asian media outlets that hit last week. We see a chance that Apple stock will remain range-bound since all the evidence supporting iPhone X sales (or any lack, thereof) seems anecdotal at best.

Apple stock to soar on “super-long” iPhone X cycle

Piper Jaffray analyst Michael Olson said in a note on Tuesday that he is now more confident in his iPhone mix expectations for fiscal 2018. He expects the iPhone X to account for 38% of all the iPhones sold in fiscal 2018. That’s in line with his firm’s survey of 400 iPhone buyers, which suggested that at least 35% of iPhone buyers plan to buy Apple’s most expensive model. He estimates that 40% of the iPhones sold will be the iPhone 8/ 8 Plus, while the remaining 25% will be older iPhone models.

Olson believes Apple stock can keep working higher in what he describes as a “super-long cycle” rather than just a “super cycle.” He has a $200 price target and Overweight rating on Apple stock.

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iPhone X expectations too high?

As Piper Jaffray’s bullish iPhone X-related sentiment landed on Tuesday, so did CLSA’s bearish view on the same topic. Analyst Nicolas Baratte focused on the reports that Apple had been reported to slash its expectations for iPhone X volumes. He noted that investors seemed surprised by that, but he still believes Apple sold between 30 million and 35 million iPhone X units during the December quarter.

He also remains skeptical that iPhone X volumes will increase in the March quarter because delivery times stood at one to two days at the end of December. He argued that this doesn’t “reconcile” with the continuing argument of pent-up demand and/or push-out to the March quarter as there was no iPhone X shortage at the end of the year. He believes that anyone who wanted an iPhone X in December already received it.

He believes that anyone who expects iPhone X units in the March quarter to be higher than 35 million or flat with the December quarter is expecting too much. He added that consensus is “revising down slowly,” but expectations remain “lofty.”

Apple stock riding on iPhone X “super cycle” thesis

Multiple analysts have been focusing on the so-called “super cycle” thesis for Apple stock based on the iPhone X ever since the first rumor about a special-edition iPhone model. GBH Insights analyst Daniel Ives described initial iPhone X sales as appearing “very strong out of the gates” in a recent report. He pegged the estimated potential earnings power for Apple at more than $12 per share going into fiscal 2019.

Ives sees Apple stock heading to between $210 and $230 per share in a bull case scenario based on the expected “super” upgrade cycle, the company’s growing services business, renewed growth in China and the more-than $250 billion in cash it could use for acquisitions, buybacks and other positive catalysts.

Apple stock jumped by as much as 1.37% to $171.55 in intraday trading on Tuesday.

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