Apple: BMO, RBC Unfazed by Delay of iPhone X
Shares of Apple (AAPL) are up 2 cents at $150.29 as the stock gets another round of estimate cuts today on what’s presumed to be delays in the availability of the next iPhone, presumably a 10th anniversary “iPhone X,” or iPhone 8, as some are calling it.
Like some others, these bullish analysts are not at all dismayed by the delay, seeing it as something that only props up later quarters for Apple.
RBC Capital’s Amit Daryanani, who has an Outperform rating on the shares, and a $168 price target, writes of “incremental data points that suggest a more pronounced iPhone X delay.”
“Based on incremental supply chain data points that suggest a more pronounced OLED iPhone delay,” writes Daryanani, “we think the flagship device may not see initial shipments until October (vs. mid/late September for historical new iPhone launches) with volume shipments not occurring until the November/December timeframe.”
Those “data points,” in case you were wondering, are:
1) AVGO recently talked about lower than seasonal growth in July-qtr but offset by stronger than normal growth in Oct-qtr;
2) ADI talked about modest growth in July-qtr, with limited Prev. clarity around Oct-qtr ramps (OLED share shift issue, but July data suggests delay likely);
3) Data points suggesting yield challenges with OLED screen (Samsung) and integrating TouchID Sensors in OLED model;
4) Delayed start to A11 processor at TSMC, but those issues appear to have been resolved. In aggregate, we don’t think a shift in production by ~1-2 months is material enough to undermine the positive iPhone Revenue narrative;
5) Yield rate challenges at ODMs.
However, just like Guggenheim’s Rob Cihralast week, and Morgan Stanley’s Katy Huberty, this delay basically shifts revenue into 2018, writing “a timing shift doesn’t alter AAPL’s $12+ Upside EPS scenario for FY18.”
Daryanani’s estimate for the September quarter goes to $45.2 billion in revenue and $1.72 in EPS from a prior $49.3 billion and $1.87. But his December quarter estimate goes to $86 billion and $3.74 per share from a prior $79.9 billion and $3.48 per share.
Similarly, Tim Long of BMO Capital reiterates an Outperform rating, and a $170 price target, cuts his September-quarter estimates, as “initial shipment volumes of the premium iPhone Pro will be limited.”
“However, we believe production capacity will ramp steadily, and we are taking our FY2018 unit and ASP estimates higher,” he adds.
Long now thinks the high-end OLED model will be more popular than he’d previously thought, causing him to raise his volume shipment estimate:
We continue to believe Apple will introduce a premium iPhone “Pro” model with an edge-to-edge OLED display alongside the standard “S” refresh in September. We believe the models will be announced and available for pre-order simultaneously, although the limited production ramp for the OLED version will mean lower shipment volumes in September. We believe production capacity will continue to ramp throughout the December quarter, with stock-outs continuing into the first half of CY2018.
Published at Mon, 24 Jul 2017 14:01:19 +0000 from Google News