Credit Suisse Raises iPhone Estimates By 3%

A number of recent data points suggest that the iPhone 7 cycle could be better than expected, both in terms of mix and volume.

Credit Suisse’s Kulbinder Garcha reiterated an Outperform rating on Apple Inc. AAPL, with a price target of $150.

Estimates Raised

The analyst also stated that checks with display suppliers also suggest that the iPhone 8 would see a super cycle.

Accordingly, Garcha has raised the CY16 and CY17 EPS estimates by 3 percent each from $7.95 to $8.22 and from $9.84 to $10.09, respectively.

“Given high retention rates, a superior ecosystem and a multi-product compute advantage, we believe FCF of ~$67 billion should be sustainable LT,” the analyst said.

Related Link: iPhone 7 Will Be A "Super Hit," iPhone 7 Plus Could Outsell It

The CY16 and CY17 iPhone volume estimates have also been raised from 208 million to 215 million and from 217 million to 221 million, respectively.

The analyst expects the FQ4:16 and FQ1:17 units at 48 million and 75 million, respectively. The CY18 unit estimate has been left unchanged at 249 million, representing 13 percent year on year growth, due to expectations of an iPhone 8 super cycle.

The iPhone Survey

“Over the past few weeks, we have run two surveys pre and post the iPhone launch of ~6,000 (4,500 iPhone) participants, both of which suggest a potential positive mix shift,” Garcha pointed out.

The survey also revealed 60 percent of the iPhone users were planning to upgrade their phones within one year, “with an implied replacement rate of all iPhone users of ~29 months, faster than the 32 months we assume in our installed base analysis,” the analyst went on to say.

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