Market Overview

UBS Doesn't Like Apple's Upgrade Cycle, Sees Declining New Customer Base

Share:
UBS Doesn't Like Apple's Upgrade Cycle, Sees Declining New Customer Base

UBS’ Steven Milunovich believes Apple Inc. (NASDAQ: AAPL) shares are likely to remain range bound in the near term, “with low multiples acting as downside support and lack of demand catalysts an upper ceiling.”

Mulunovich maintains a Buy rating on the company, while lowering the price target from $120 to $115.

Disappointing Upgrade Cycle

The analyst mentioned that the iPhone 6 upgrades have been disappointing, with the upgrade cycle lengthening due to changing carrier plans and lower feature differentiation.

“Our installed base analysis reflects that the iPhone 6 was unusually well received,” Milunovich said, stating that 37 percent of the installed base entering FY15 is likely to have purchased a new iPhone.

Related Link: Analysts At Baird, UBS Debate Apple's Stock

The impact of this is being felt in FY16, with a significantly lower upgrade rate of 25 percent expected.

“Our base case for F17 is total iPhone unit growth of 4 percent to 217 million based on a 23 percent upgrade rate and a decline in new customers,” the analyst pointed out.

Milunovich noted that predicted iPhone sales was difficult, although Apple had mentioned that there has been an 80 percent increase in the installed based over the last two years.

Declining New Additions

Milunovich expects new user additions to moderate going forward, while pointing out that half the sales in China has been to new users.

“Given the sudden weakness in China and immaturity of India, we assume declines in sales to new users the next few years,” the analyst, however, cautioned.

Latest Ratings for AAPL

DateFirmActionFromTo
Jun 2020WedbushMaintainsOutperform
Jun 2020UBSMaintainsBuy
Jun 2020Deutsche BankMaintainsBuy

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings

 

Related Articles (AAPL)

View Comments and Join the Discussion!

Posted-In: iPhone 6Analyst Color Long Ideas Price Target Reiteration Analyst Ratings Tech Trading Ideas

Latest Ratings

StockFirmActionPT
AGCODeutsche BankDowngrades60.0
AGRWells FargoUpgrades48.0
ATCXDA DavidsonInitiates Coverage On
CATDeutsche BankUpgrades166.0
CMCSABernsteinUpgrades52.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com