All The Recent iPhone 7 Comments In One Place
With the seemingly lackluster release of Apple Inc. (NASDAQ: AAPL)'s iPhone 7 on September 13 and the negative commentary surrounding the lack of a 3.5mm headphone jack, many investors were unsure how the tech giant’s latest release and the retail sales following it would impact the stock price.
Looking at the analyst commentary between the release and now, it’s clear that the outlook is almost entirely positive.
Many analysts are pointing at the promotional activities of mobile carriers, which have subsidized sales. Some are pointing out the popularity of the iPhone 7 Plus compared with the base model. Some are citing hard data, consumer knowledge and Apple’s inventory management as a factor. Most have increased their target price and maintained a positive rating following the release.
Here’s what the experts have said about mobile carrier’s promotional activities.
BTIG increased Apple’s target price from $124 to $133, and referenced incentives offered by mobile carriers. “Despite the wireless industry being at peak margins and record low churn, the dominant wireless operators, AT&T and Verizon, joined the challengers in offering free iPhone promotions that effectively include a phone subsidy,” said BTIG analyst Walter Piecyk.
CLSA raised its price target for Apple Inc. from $120 to $130, also citing the various wireless carrier promotions. “As wireless customers enjoy the most compelling value proposition in years (25 percent lower cost for service/iPhone), it is likely to stimulate the recently depressed upgrade rates for US carriers,” analyst Ari Silver said.
Analyst Trip Chowdhry pointed out that the iPhone 7 Plus was outselling the base model, and suggested it was due to the importance of photos and videos in our digital lives. Chowdhry also mentioned with premium model selling well, Apple’s profit margins could increase and, if popularity persists, lead to greater sales of the Apple Watch 2.
Morgan Stanley maintains an Outperform rating with a price target of $123. The firm cited preorder data and knowledge of Apple’s product life and customer base. The firm stated that only 25 percent of users would need to upgrade in order to beat estimates.
"We think that is quite reasonable, as it implies a four-year iPhone life, and our global consumer survey in June revealed that about half of iPhone users still have 4" versions (5, 5s, 5c, SE). While some will upgrade to the SE, many will pick a larger iPhone in our view," analyst Katy Huberty said.
UBS increased its price target from $115 to $127. The firm cited “encouraging evidence lab analysis of search volumes."
”The UBS Asia tech team's latest estimates show iPhone 7 procurement plans for F17 have increased from 80mn to 89mn, mainly due to 7 Plus needs," the analyst said.
Citi maintains a Buy rating with target price of $120. The firm implemented store visits into its analysis.
“Supply remains the gating factor for iPhone 7 Plus and iPhone 7 Jet Black models which arrived in very limited quantities at stores, and in some cases only to suffice for those who has pre ordered and were picking it up in the Apple store,” analyst Jim Suva stated.
Credit Suisse maintains an Outperform rating and price target of $150. The firm cited customer loyalty as a justification.
“Given high retention rates, a superior ecosystem and a multiple-product compute advantage, we believe FCF of about $67 Billion should be sustainable LT,” analyst Kulbinder Garcha said.
Speaking with Bloomberg, Cowen analyst Tim Arcuri outlined that with this release Apple wanted to “maintain some supply constraints” until the demand for the new product became “a little more certain.”
RBC Capital conducted a survey of more that 6,000 people and used the results to increase its price target from $120 to $125.
Nomura analyst Jeffrey Kvaal maintains a Buy rating and raised the price target from $120 to $135, stating that data points indicated a robust launch and a “supercycle” wasn’t necessary.
Wells Fargo downgraded Apple the week before the iPhone 7 release, and, the week after, commented that the incentive strategies employed by the big four wireless carriers was “reckless.”
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