Mike Wuerthele
One analyst firm has broken from the pack, and is cautioning investors that it fears that the "iPhone 8" so-called "supercycle" may be overblown, and that the sales for fiscal year 2018 will fall just short of those lofty heights.
In an analyst note penned by Deutsche Bank, and seen by Business Insider, the factors that led up to the 2015 iPhone 6 and 6 Plus release was the "real super cycle." Factors cited in that release year that "will not repeat" including Apple's adoption of larger screens in the iPhone, and the addition of China Mobile.
Deutsche Bank also believes that given the lack of carrier subsidies in 2017, that people are now holding on to phones longer, with the average refresh cycle claimed to be 2.7 years at present.
Another point of pressure acting against a super cycle is a possible price hike on the iPhone 7S family, with the iPhone 8 likely retailing for well more than $1000. The analysts believe that this will have a net negative effect on demand.
"Generally, when prices go up, demand goes down," says Deutsche Bank. "A scenario where prices go up and demand goes up seems highly unlikely in our view."
Wall Street is modeling shipments at 244 million units for fiscal year 2018. Deutsche Bank sees about 230 million total units in the fiscal year starting in October 2017 — just short of the 231 million in fiscal year 2015 with the iPhone 6.
Source: Deutsche BankThe "iPhone 8" is predicted to sport an edge-to-edge OLED panel with a 5.1-inch user space — the rest dedicated to virtual buttons. Slimming or removing the bezels would allow Apple to cram a larger battery into a form factor similar in size to the 4.7-inch iPhone 7. Also expected is a new 3D facial scanner .
With a complete redesign, plus the inclusion of a 2.5D curved glass back with wireless charging, some reports have pegged the starting price of the "iPhone 8" at more than $1,000, and others as much as $1,200.
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So the analysts in question are setting AAPL expectations low. I'd rather see that that the opposite. I recall the day (and I know not if this was a Steve strategy or reality) Apple always low balled expectations then blew them away. These last few years the pattern has almost exclusively been the Wall Street expectations were ridiculously high (probably on purpose) so even great results were disappointing causing AAPL to drop like a rock immediately after great results were announced.
Here is their price target reduction to $105 just before Apple shares skyrocketed. These analysts at DB could not have been more wrong. They cite many of the same reasons now as they did then
https://www.streetinsider.com/Analyst+Comments/Apples+%28AAPL%29+Price+Target+Reduced+to+%24105+from+%24125+at+Deutsche+Bank/11208950.html
In related news, an analyst predicts that Apple analysts will incorrectly predict how analysis will react to predictions by financial analysts.