Apple fans everywhere want to find out the release date of the iPhone 8, and it’s looking more and more like it will be in October rather than September. One analyst is now starting to say that it would be “reasonable to assume” that the release date of the iPhone 8 will be a month later than iPhone releases have been in recent years.
Meanwhile, others are debating the extent of the iPhone 8 cycle and whether it will be “super” or not.
Release date of the iPhone 8: better late than never
In a note to investors, Morgan Stanley analyst Katy Huberty boosted her price target for Apple from $177 to $182 a share and reiterated her Overweight rating. However, she believes the rumors about the manufacturing problems with the iPhone 8, and she went so far as to say that there’s “increasing evidence” that it will launch in October instead of September.
As a result, she slashed her estimates for the September quarter, moving them to the December quarter to account for the later release date of the iPhone 8. She also believes shifting the release into the December quarter will boost the average selling price.
Of course, she’s referring to the tenth anniversary model, which is expected to be the first iPhone to sport an OLED display. Some are calling it the iPhone X, which admittedly seems more fitting than iPhone 8 if it truly is a special edition to mark the tenth anniversary of the handset.
iPhone 8 cycle could last longer
Apple is scheduled to release its next earnings report on Aug. 1, and Huberty expects the company’s guidance for the September quarter to come up short of expectations because of the later release date for the ultra-premium iPhone. She expects a longer-than-usual cycle for the iPhone 8, as she expects a huge March quarter on top of a massive December quarter.
Huberty believes that there is pent-up demand for the OLED-equipped iPhone model, as she thinks many users have been waiting for a model with compelling features before they will upgrade. She also believes that other analysts haven’t fully priced the supercycle into their estimates.
Decoding the release date of the iPhone 8 from Apple’s outlook
Goldman Sachs analyst Simona Jankowski agrees with Huberty on the iPhone 8 “supercycle” thesis for Apple. On Aug. 1 when Apple reports its results from the June quarter, she expects investors to be more focused on management’s guidance for the September quarter. Also like Huberty, she also warned that their guidance might be “highly volatile,” depending on the release date of the iPhone 8. Clearly, that guidance is the best clue investors and Apple fans will have in terms of guessing the release date of the iPhone 8.
In a note to investors last week, Jankowski said she expects Apple to guide for $48 billion to $50 billion in sales for the September quarter, which is very short of consensus at $50.5 billion. She added that this implies a Sept. 29 release date of the iPhone 8. She believes that guidance of $51 billion to $53 billion would imply a Sept. 22 release date, and anything below $48 billion probably implies an October release.
Even though Apple stock could be volatile in the near term due to uncertainty about launch timing, the Goldman analyst recommends that investors stay long Apple going into the product cycle. She sees “significant EPS upside” in fiscal 2018, as she estimates $11.50 per share, compared to the consensus of $10.48 per share. The reason her estimate is so much higher is because she’s expecting a higher-than-typical average selling price, as her recent consumer survey indicated “surprisingly little sensitivity” to a starting price tag of $1,000 for the iPhone 8.
Will the iPhone 8 be a “supercycle” or just a cycle?
But a few analysts aren’t ready to say that the iPhone 8 will be a so-called “supercycle,” as Deutsche Bank analyst Sherri Scribner argued in a note last week that expectations could be too optimistic. She expects the special edition model to be just a cycle rather than a supercycle and warned that investors might be disappointed by iPhone growth in fiscal 2018 and 2019.
She pointed to the fundamental challenges Apple is up against in the smartphone market, including saturation in certain markets, lengthening refresh cycles, declining share, growing competition in China, and a stronger secondary market. She sees Apple as a “trading stock” and sees “modest downside risk” against near-term expectations. In the long term, she believes Apple stock is fairly valued at around $130 a share, so she maintains her Hold rating.
In Scribner’s view, the real supercycle was the iPhone 6/ 6 Plus cycle, when shipments peaked at 231 million in fiscal 2015 and haven’t reached that level again. She doesn’t expect this next iPhone cycle to be as big as that cycle, as she’s looking for only 230 million units in fiscal 2018, although consensus is expecting 244 million, she said.
