Neil Hughes
While most on Wall Street expect the average selling price of the iPhone will drop this holiday season, RBC Capital Markets believes the greater capabilities of the iPhone 7 Plus could have a counter effect, resulting in stronger-than-anticipated earnings per share for Apple.
iPhone ASPs could bring some so-called "wow factor" to Apple's earnings per share this December quarter, analyst Amit Darnyanani said in a note to investors on Friday. Based on surveys conducted by RBC, he believes iPhone ASPs could be flat or even modestly up year over year, thanks largely to the upsell factor of the dual-camera iPhone 7 Plus.
In addition, he noted that Apple is charging a $120 premium for the iPhone 7 Plus. That's an increase from the past two years, when 5.5-inch models were $100 more expensive than the 4.7 inch versions of new iPhones.
In contrast, current models on Wall Street call for iPhone ASPs to be down between 5 and 10 percent. So even if iPhone prices hold flat year over year, Daryanani believes that could be an upside surprise for investors.
RBC rates shares of AAPL to "outperform" with a target price of $125.
One factor working against iPhone ASPs, however, is Apple's new higher capacity models. Rather than starting with an entry level of 16 gigabytes, Apple's latest models ship with a minimum of 32 gigabytes, which could result in fewer people opting for more spacious models, Daryanani noted.
RBC's survey found that 46 percent of respondents plan to buy Apple's larger 5.5-inch handsets, including both the iPhone 7 Plus and the newly reduced price iPhone 6s Plus. In addition, this year there is a stronger preference for the newer iPhone 7 series than the then-flagship iPhone 6s inspired a year ago.
For the just-concluded September quarter, RBC has forecast revenue at $47.3 billion and earnings per share of $1.68, on sales of 44.2 million iPhones. Those numbers compare to Wall Street at $46.9 billion and $1.66.
And in the December quarter, RBC is calling for sales of 79 million iPhones, which would be a new record for Apple, leading to $78.9 billion in revenue and $3.34 earnings per share. Wall Street, meanwhile, expects about 75 million iPhone sales, revenue of $74.3 billion, and $3.18 EPS.
RBC rates shares of AAPL to "outperform" with a target price of $125.
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18 Comments
Whatever, someone will find something to troll the stocks anyway...Apple stock should be at $150 while Samsung stock should stumble but...Samsunystock is at all time high with explosive phones and washers...what a joke!
I was thinking the same thing. I had never bought anything but the 16 gig model and bought an SE earlier this year rather than a 6s.
With the additional camera and additional storage options, I decided to upgrade my second line to the 7Plus. And I think a lot of people did the same. The black option and cleaner look also helped, so Apple did good this year even though they couldn't deliver their true upgrade this model year.
So they were able to get TWO purchases from me this year, a year in which they really didn't have true new models ready. And I'm very happy with my purchases. I LOVE MY SE and if Apple never updates the 4" model I'm keeping it until it dies. I love the compactness of it and is my primary on the go phone.
And likewise I LOVE my 7 plus. I never use my iPad mini anymore and it is an awesome companion with the louder speakers and larger screen to use with maps on a drive or at home reading or watching videos.
And unlike the 6 series in pink and gold with a tacky ring on the camera and tacky antenna lines, ..in black it looks badass.
So I hope this little predicament that Apple turned into a positive by upgrading the smaller 5S and making the flagship not look tacky and give the customer MORE value in the storage options...I hope this predicament of not having a new model ready and delivering customers more of what they wanted in the first place. Smaller option, more storage, truly Apple-like design sensibilities in the 7, I hope they relearned what people love Apple devices.
Oh and iOS. It can't be stressed enough. IOS is Apple's greatest asset today and it only keeps getting better. Their chip designs keep getting better.
They may have dropped the ball on the design side, but their engineering and software development is what has kept Apple as the only true high-end product on he market when it comes to smartphones.
They may not look as beautiful on the outside as they once were, but they are still the most beautiful inside where it really counts.