Anyone Else More Excited For Apple Watch 3 Than iPhone X?

Analysts at KeyBanc Capital Markets weren't particularly impressed with Apple Inc. AAPL's iPhone X announcement and appears to be more excited for the Apple Watch 3. The firm's Andy Hargreaves maintains a Sector Weight rating on Apple's stock with no assigned price target.

The iPhone X doesn't appear to be compelling enough to warrant a $300 premium to the iPhone 8, Hargreaves commented in a research report. In fact, the only demographic that may be willing to pay an extra $300 for the X versus the 8 is the "relatively rich people who care deeply about the appearance of their phone."

The problem for Apple is that this group is smaller than previously expected and the mix of iPhone X units sold in fiscal 2018 stands at just 22 percent, down from a previous estimate of 32 percent, the analyst continued.

The lack of any compelling features in the iPhone X also creates longer-term concerns surrounding Apple's pricing power despite its "extraordinary brand loyalty." On top of that, the iPhone X's disappointing features implies that any compelling new feature in the future will be difficult to come by.

On the other hand, the improvements to the Apple Watch 3 will be compelling enough to drive incremental demand and fuel strong growth in units sold beyond the fiscal 2018 cycle, the analyst added.

Bottom line, Apple's product launch event as a whole was "disappointing" and "raises the risk that Apple will struggle to drive incremental upgrade activity in future cycles." As such, shares are currently valued at its current levels.

Related Links:

Everything You Need To Know About The iPhone 8 and iPhone 8 Plus

The Importance Of iPhone X: Apple Has Moved The Entire Market Before

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Image Credit: Apple