Stephen Silver
The day after Apple unveiled three new, pricey iPhones and a new Apple Watch, the move even further towards the premium segment was a focus of several analyst reports, with them all saying that Apple's earnings will hit new heights both from increased sales volume, and a higher average selling price per device.
Analysts weighed on late Wednesday and early Thursday on Apple's reveal of three new iPhones, the iPhone XS, XS Max, and XR, with the iPhone XS family positioned in price similarly to the iPhone X from a year ago.
"Once again, Apple has shown their mastery of pricing tiers," Gene Munster of Loup Ventures wrote. "Factoring in nine new phones with price points above the FY18 ASP ($745) makes it highly likely that ASPs will trend up."
Munster also noted that thanks to improving hardware and WatchKit, Apple Watch is "building an insurmountable lead in the wearables space."
Morgan Stanley's Katy L. Huberty announced a $2 price target increase to $247, its second increaes of its Apple price target in two weeks.
"Today's product event largely met our expectations heading into the event," said Huberty. "While this iPhone launch was marketed as an "S" cycle, iPhone ASPs and larger storage SKUs across the portfolio surprised to the upside, as did the inclusion of dual-SIM capabilities."
Other analysts spoke in more detail about the other features of the new iPhone lineup.
"The company is attempting to create more iPhone options, while moving its whole portfolio further up into the premium segment," wrote Wayne Lam, Jusy Hong, Gerrit Schneemann of IHS Markit. "Apple has completed its hardware design refresh that started with iPhone X, and moves to an all-notch display line-up. Features like high-refresh-rate and high-dynamic-range (HDR) OLED displays, computational photography and enhanced audio recording, and improved performance for artificial reality (AR) games and other offerings, re-enforce Apple's focus on the user experience Apple is now further moving its devices beyond the reach of its competitors, at least in terms of the ability to charge premium prices."
Guggenheim Partners' Robert Cihra wrote that Guggenheim is raising its Apple price target to $245, from $235, following the announcement.
"A is for Apple; A is also for ASP, we think investors have been too focused on flattening iPhone units and not enough on its potential to grow through ASPs (e.g., able to raise prices without losing market share, illustrating the power of its high-end demographic and peel-off-the-top model)," Cihra wrote. "Indeed, we reiterate our math that with Apple's iPhone ASP having increased in 6 of the 10 years since introduction (contrary to typical hardware deflation), those price increases have effectively been a bigger driver of Apple's revenue "upside" than its units over that period."
While noting that most of what Apple announced Wednesday had leaked in advance and was therefore unsurprising, Macquarie Research's Ben Schachter proclaimed Macquarie "incrementally more positive given AAPL's likely ability to raise iPhone ASPs," and therefore raised their price target from $214 to $235. Schachter also noted that the new AppleCare pricing announced Wednesday had a chance to positively impact revenue in Apple's Services sector.
Jun Zhang of Rosenblatt Securities, while surprised at the lack of a new iPad Pro, set a $200 price target. "Overall, we are positive on Apple, as we believe the company will continue to generate strong iPhone shipments, strong service revenues, and increase margins." While stating that the new iPhone XS "may not offer enough of a product upgrade from the iPhone X to drive sales," Rosenblatt predicted that the other two models "will perform well in the market."
On Wednesday in Cupertino, Apple officially announced three new iPhones, the iPhone XS, XS Max, and XR, as well as the redesigned Apple Watch Series 4.
Christine McKee
Malcolm Owen
William Gallagher
Amber Neely
Andrew O'Hara
22 Comments
These morons do realize that some of these phones will cost $1500 + with taxes, right?
A comment I saw on the New York Times describes these phones well- do not call the phone the iPhone X S, call it the iPhone "excess".
From the Google:
It is not so much a phone as it is a portable Playstation combined with a camera with fake Bokeh.
Apple was able to deliver yet again. They still have that 'magic' that keeps you on the edge of their seat during their announcements. I think it's interesting that Apple once again used their patented method of introducing a controversial feature (removing the home button) in a high end, high priced version, while leaving the legacy method intact in the old, undesirable model. Then, releasing said controversial feature in the lower priced, mass market model, and it's now no longer controversial, instead it's an upgrade. They've done this before, and it's a really smart method. Also, now that Apple is in control of their own chips, they finally are free of the shackles of some other company's time tables not matching up with their announcements. And they don't have to pay high prices for the high-end designed chip, they can just throw every feature they want in. No more paying Intel through the nose to hit print on some new 7nm process they've already developed.
It's the Apple Watch Series 4. I am predicting it will sell like pancakes on the 4th of July.