Deutsche Bank: Apple iPhone SE Won't Be Significant Refresh Driver

Deutsche Bank’s Sherri Scribner maintained a Hold rating for Apple Inc. AAPL, with a price target of $105, saying that the company’s recently launched products were broadly in-line with expectations.

Apple has launched the new iPhone SE, a 4” iPhone that resembles the iPhone 5s, albeit with an upgraded A9 processor, the latest camera, TouchID, and Apple Pay enabled in the 16GB and 64GB configurations. The company also launched a new 9.7” iPad Pro with minor display updates. Some new Apple Watch bands and the new iOs 9.3 were also released.

Some Surprises

While most of the event was in-line with expectations, there were some surprises, analyst Sherri Scribner said.
The pricing for the iPhone SE starts at $399, at the low end of expectations of $400-$500, and lower than the iPhone 5s at $450.
The company cut prices for the Apple Watch by $50 to $299 for the 38mm low-end model and to $349 for the 42mm low-end model.
Apple cut the price of the iPad Air 2 by $100 to $399.

Takeaways

Scribner commented that in the absence of “any new features or functionality versus the iPhone 6s, and with the same form factor as the iPhone 5s,” the new iPhone SE is unlikely to be “a significant refresh driver” or add to Apple’s installed base.

Although the new iPhone SE is priced at a substantial discount to Apple’s current $691 ASP, it is still about $100 higher than the estimated global smartphone ASP, and substantially higher than the ASP in the key emerging growth markets of India and China, the analyst pointed out.

“Given slowing smartphone market growth, Apple’s high price points, and elongating refresh cycles on smartphones, tablets and PCs, we see limited near-term catalysts for the shares,” the Deutsche Bank report stated.