Roger Fingas
RBC Capital Markets has raised its Apple revenue forecasts for 2015 and 2016, arguing that iPhone demand could beat expectations for some time into the future, and that people are skewing towards buying more expensive, higher capacity iPhone models.
Citing supply chain checks and an RBC survey of over 6,000 people, analyst Amit Daryanani said in a note to investors on Monday that iPhone sales should not only beat earlier June-quarter predictions, but have the potential to stay ahead of forecasts "through 2015 and beyond." Carrier contracts are reportedly still the most important factor behind refresh cycles, which Daryanani suggests should help the upcoming iPhone 6s, alongside the growth of 4G networks in China.
Newer RBC estimates for the June quarter call for $49.3 billion in revenue and $1.78 in earnings per share, versus previous targets of $47.3 billion and $1.69. A copy of Monday's note was provided to AppleInsider.
Specifically, iPhone shipments for the current quarter are forecast to hit 46.5 million, an increase from the firm's earlier target of 42.9 million. Those projections are lower than rival firm Morgan Stanley, who said last week that it believes Apple is on pace to ship 53 million iPhones this quarter.
The survey moreover indicated that the average selling price of iPhones could rise, as many people are planning to buy phones with a greater amount of storage. Apple turns a bigger profit off of its 64- and 128-gigabyte tiers, as the premiums it charges are significantly higher than the cost of the extra memory.
So far there has been no indication that Apple plans to raise its base tier from 16 to 32 gigabytes with this year's anticipated "iPhone 6s." Some rival smartphone makers, such as HTC and Samsung, have been switching to 32 gigabytes as a default.
For the whole of Apple's 2015 fiscal year RBC is now modeling for $233 billion in revenue and $9.07 in earnings per share, improved from a previous forecast of $231 billion and $8.98. The firm's estimates for fiscal 2016 are currently $247 billion and $10.08, assuming a 3 percent bump in iPhone shipments to 236 million.
RBC has maintained its price target of $150 for Apple stock.
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Charles Martin
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38 Comments
Pretty confident that AAPL won't hit $150 this year. I'm sticking with $140 for now, although there is an increasing possibility of a large market correction coming soon.
[quote name="SpamSandwich" url="/t/186956/buyers-opting-for-higher-capacity-iphones-likely-boosting-apple-profits-rbc-survey-finds#post_2741768"]Pretty confident that AAPL won't hit $150 this year. I'm sticking with $140 for now, although there is an increasing possibility of a large market correction coming soon.[/quote]$140 is my limit sale price, all of them. I never believe Apple will drop 16GB. Present of 16GB makes 64GB a better deal. Dropping 16GB for 32GB encourages 64GB owners to go back to 32GB. That's a bad business move.
[QUOTE]Apple turns a bigger profit off of its 64- and 128-gigabyte tiers, as the premiums it charges are significantly higher than the cost of the extra memory.[/QUOTE] Hence why 32GB was replaced by 64GB but 16GB still remains. Gotta keep those ASPs high and there's more margin to play around with at the higher end. I've said I think that will change this year but the more I think about it the less sure I am. If Apple successfully upsold lots of people to 64GB (who would probably be just fine with 32GB were it an option) no way would they give them a reason to downgrade. Unfortunately I think 16GB is here to stay.
Makes sense to me, I traditionally bought the 16GB models, keep a modest number of apps on my phone, and not a particularly large picture taker, nor kept much music. But I do keep most of my texts, which over time really begin to add up especially if friends and family attach pictures and videos. I found that when I did want to shoot video, I didn't have any space left to do it. Now that the current crop of phones shoot such amazing video and photos, that space will fill up quickly. I have 64GB, and that to me seems like the minimum necessary for piece of mind that I will have the room to shoot video and take lots of pictures when I want to, without constant management of my storage. Since they discontinued the iPod Classic, I'm curious to see when they will introduce a 256GB iPhone. Frankly I was surprised it didn't last until the iPhone at least matched its capacity.
[quote name="fallenjt" url="/t/186956/buyers-opting-for-higher-capacity-iphones-likely-boosting-apple-profits-rbc-survey-finds#post_2741771"] $140 is my limit sale price, all of them.[/quote] Yeah, I'm considering finally selling all my AAPL too. No matter what steps forward Apple takes, there seems to be an endless barrage of attacks, bad news, lies and political pressures that drag the stock back down. I figure if it hits $140 I'll go ahead and retire. It makes less sense for me to work than ever before and I can't abide supporting with my tax dollars a public or government I consider increasingly Marxist and socialistic. If I'm lucky I'll live another 25-30 years and I'll see the arrival of true artificial intelligence near the end.