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UBS sees $900 'iPhone 8' growing Apple's sales by 15%

Apple's flagship OLED "iPhone 8" could help push shares of the company as high as $170, investment firm UBS believes, issuing a note to investors on Tuesday saying that 2018 earnings per share will likely exceed market consensus expectations.




Analyst Steven Milunovich of UBS said that Wall Street is currently calling for Apple to see $10.50 earnings per share in fiscal year 2018 —a number he thinks will be achievable with the anticipated high-end "iPhone 8."

Milunovich's estimates, seen Tuesday by AppleInsider, assume the OLED handset will ship in November with a starting price of $900 for 64 gigabytes of capacity. He also thinks Apple will offer a 256-gigabyte version for $1,000.

UBS's forecasts see iPhone unit sales growing 15 percent in fiscal year 2018, driven by strong demand for the flagship "iPhone 8."

Notably, a $900 starting price would actually be lower than rumored, with some reports claiming the starting price of the redesigned iPhone could exceed $1,000. UBS, however, is skeptical that Apple would charge that much.

"Although a higher OLED price is possible, Apple typically doesn't price too far above high-end competition," Milunovich wrote.

For Apple's 2018 EPS, Milunovich has presented three possible scenarios. In one, the OLED "iPhone 8" sees strong demand and is accompanied by a lower entry price for the mid-tier "iPhone 7s." With an average selling price of $680 and flat gross margin, he sees earnings per share at $10.65.

Another, bearish scenario could see demand for the OLED iPhone being lower than expected, perhaps due to high pricing. With a lower average selling price and gross margins, he could see EPS dropping to $10.45.

Finally, the optimistic case calls for strong OLED demand and no price cut on the LCD "iPhone 7s." In that scenario, he predicts EPS could go as high as $11.90.

Milunovich has maintained a "buy" rating for shares of AAPL with a price target of $170.