Argus Highlights The 'Collective Yawn' For Apple's iPhone 7

Apple Inc. AAPL launched the much-awaited iPhone 7 on September 7. The absence of any surprise element resulted in a 3 percent decline in the company’s shares on September 8, Argus’s Jim Kelleher mentioned in a report. He maintained a Buy rating on Apple, with a price target of $135.

Nothing Exciting About The Launch

The recently-launched iPhone 7 broadly matched expectations. “The tepid and even negative response expressed in the stock price, in our view, equally reflects the lack of ground-breaking developments as well as the lack of any surprise factor,” analyst Kelleher commented. He expects the iPhone 7 to be a success at least partly due to the upgrade timing.

Cycle Dynamics

Apple would likely report negative EPS comps for FY16. Kelleher pointed out that Apple’s shares had been under pressure towards the end of the iPhone 5 cycle and had gained significantly once the iPhone 6 became available.

Similarly, the iPhone 7 cycle had now begun and cycle dynamics were favorable, the analyst said. He added, “Given the cycle realities that now drive results, we believe that Apple’s positives are not fully reflected in the share price.”

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