William Gallagher
Analysts at Wedbush say they've raised Apple's price target from $230 to $240 because of both the strength of the iPhone 15 launch event, and new supply chain checks.
"Apple's iPhone 15 launch event was overall an impressive event," the firm says in a note to investors seen by AppleInsider, "which in our opinion lays the groundwork for a major upgrade cycle over the next year that will surprise the Street to the upside."
"Our Asia supply chain checks this week give us increased confidence that iPhone units should be roughly 85 million units out of the gates," it continues, "and could be close to 90 million as eye popping carrier promotions on the horizon will be a major catalyst for upgrades into holiday season."
Ives believes that Apple has seen massive gains in the China smartphone market, giving Apple "incremental momentum" on further gains over the next nine months.
Wedbush had previously kept its price target on $230 despite what it called the overblown market reaction to China's government banning its staff from using iPhones. At the same time, the company was expecting a "mini super cycle" of users upgrading from older iPhones, but that wasn't sufficient to raise its price target.
Whereas Apple's failing to raise prices on the iPhone 15 model — at least in the US — has convinced Wedbush that sales will be better than hoped.
"The lack of a price increase on iPhone Pro Max while a surprise will result in an incremental 8 million to 10 million units globally during this launch cycle we estimate," says the company. "We believe iPhone units should level out in the 225 million unit range in FY24 and a rising ASP lift which is being underestimated by the Street as Cupertino has a massive pent-up installed base upgrade cycle now underway."
The base model of the iPhone 15 Pro Max is now more expensive than the base of the iPhone 14 version, but last year's model started with 128GB of storage. The new base model starts with 256GB, and is priced the same as the 256GB version of the iPhone 14 Pro Max.
The firm is also expecting a big shift to the iPhone 15 Pro Max versus previous years premium iPhone mixes.
"We also expect a heavy iPhone Pro mix shift for iPhone 15 in a 75%/25% base model vs. the historical 60%/40% seen over the past few years in a major ASP tailwind for Cook & Co. especially out of China in a very heavy Pro/Max model mix," Ives wrote.
This will drive average selling price per iPhone up to nearly $925, up roughly $100 year-over-year during Apple's fiscal year 2024 that begins on October 1.
"Overall with the services business back to double-digit growth over the coming quarters and an iPhone 15 upgrade cycle set to prove the doubters wrong yet again," says Wedbush, "we believe Apple is a table pounder at current levels."
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11 Comments
Impressive event? I can’t recall a more boring iPhone introduction in recent memory. The only interesting thing I saw was the possibility of a good trade-in value for my old iPhone. In general, I believe Wedbush is trying to manipulate the market into following its outlandishly bullish AAPL recommendations to its clients. Why else pronounce a coming “super cycle” of upgrades for a phone with no “super” new features? Why would there be more pent up demand for it vs any previous year?
Agreed Twolf. I bleed Apple Juice and was severely disappointed with yesterday’s event. All of those the announcements could have been soft launches (just update and don’t say anything).
Oh, wait, was there a second Apple event yesterday that I missed? 'Cause Wedbush saw an "overall impressive event" and I watched something completely different--at least, the parts of it I saw when I wasn't dozing off.
Seriously though... what drives the Wedbush expectation of a major shift specifically to the 15 Pro Max models beyond norms til now? The fact that the price didn't go up for 256GB of storage and above? Or is it the optical zoom that's now 5X instead of 3X? Are you kidding me? And their whole thesis for their new price target rests on this major shift in model sales and the higher average selling price it will drive. Good luck with that!
Yesterday's event, overall, failed to live up to even the very modest rumor expectations for it. But hey, let's be glass-half-full about this: the good news is that we won't be paying extra, as widely rumored, for a Thunderbolt cable to use with the Pro models! Oh, but that's only because the 15 Pro models don't support Thunderbolt after all! The much talked about periscope lens has 5X reach, which was the lowest of the rumored ranges and a very modest improvement on the existing 3X lens. No color-matched USB-C cables. Most boring color selection ever for the Pro models--the *cough* "special" colors are a blue we've sort of seen before and light gray... zzzzzzzzzz. No mention of improving the much and deservedly maligned Siri, although she can now misinterpret your requests directly on Apple Watch 9! No overall switch to USB-C for all Apple accessories. Like, honestly, wtf with continuing to sell Lightning keyboards, mice and trackpads? Every sale just perpetuates the need for a Lightning cable for years to come, the lifespan of that accessory. No way for current Airpod Pro 2 owners to upgrade their case to the USB-C model which can be charged wirelessly from an iPhone -- the Airpods themselves are the same so this was simply a matter of making cases only available for sale. (Not to mention that Apple should have released with the Pro 2 with a USB-C case when it debuted last October because they had redesigned the case anyway.)
There was nothing impressive about that event.