'Pent up' iPhone 14 demand will skew heavily to Pro models
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Apple's supply chain is in a strong position for the launch of the iPhone 14, Wedbush analysts believe, with a raise in average selling prices expected through consumers shifting towards the Pro models.
The iPhone 14 launch, anticipated to occur during the September 7 event, will be a "massive achievement" for Apple and its management, according to Wedbush analysts Daniel Ives and John Katsingris, in a note seen by AppleInsider.
After supply chain issues and COVID shutdowns, it is thought that Apple will maintain its initial 90M unit order for the iPhone 14, which will be "roughly flat" with the iPhone 13. This is despite "the macro storm clouds building."
Wedbush estimates there will be high demand for this iPhone release, with 240 million of 1 billion iPhone users around the world yet to upgrade after 3.5 years. As for what that upgrade could be, it is thought to be more premium devices.
"In particular, we believe Apple is expecting another heavy iPhone Pro and Pro Max mix shift which is a clear positive for ASPs heading into FY23," the note states. Given rumors that the iPhone 14 update will be extremely minor compared to a bigger iPhone 14 Pro spec bump, this may be justifiable.
Though pricing is reckoned to stay static for the iPhone 14, Wedbush thinks the iPhone 14 Pro and Pro Max will see a $100 price increase. Along with a 48MP camera and A16 chip on Pro, Apple may possibly include some "storage enhancements" across all of ts models.
Wedbush also comments about China, which will apparently see strong demand for the new models. The baseline of 220 million iPhone units for FY23 is "Likely a low bar given the pent-up demand story that we are seeing," the analysts muse.
For China alone, it is estimated that roughly 30% of iPhone consumers are in the upgrade window, and with most likely to be Pro and Pro Max purchasers.
The Services arm will continue to see growth in FY23, Wedbush adds, with growth to $90B in the year and a potential to beat $100 billion in FY24 with continued double-digit growth. It is a "key revenue stream" for Apple that "remains at the epicenter of Apple's multiple and growth story during this market storm."
Apple's Services business is thought to be worth north of $1 trillion alone on a growth and EBITDA basis. When combined with its iPhone hardware business, Wedbush believes that this "makes the risk-reward very compelling at current levels."
Wedbush believes Apple's growth story has "clear momentum" around the iPhone 14, "despite the shaky macro." The firm is maintaining its Outperform rating and a $220 price target.