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iPhone's Average Selling Price Could Rise To $679 In Q1

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iPhone's Average Selling Price Could Rise To $679 In Q1

Approximately 75 percent of Apple Inc.'s (NASDAQ: AAPL) profit are derived from iPhone sales. Given that the new iPhone 7 is now available for purchase, investors are not only asking how many devices the company will sell, but at what price.

According to Toni Sacconaghi of Bernstein, Apple should be able to boost the average selling price (ASP) of its iPhone devices to $679 in its first fiscal quarter, which marks a notable increase from the recent lows of $595 seen in the fiscal third quarter.

The higher average selling price is attributed to a higher mix shift towards the more expensive iPhone 7 Plus and higher storage configurations on the "jet black" models.

Related Link: 'Wow!' Jim Cramer Impressed With Reports Apple's iPhone 7 Will Outsell iPhone 6

The analyst noted that ASPs have "often been a key driver of iPhone revenue" and consensus estimates for an ASP of $659 in the December quarter "may be too conservative."

Sacconaghi's expected iPhone ASP strength serves as an "additional cushion" to first quarter consensus revenue estimates. For the full fiscal year, the analyst's ASP estimate could provide the equivalent revenue boost of approximately six million incremental iPhone unit sales.

Bottom line, the analyst continues to view the risk-reward profile on Apple's stock to be "favorable" and as an "attractive re-valuation opportunity going into the iPhone 7S/8 cycles."

Shares of Apple remain Outperform rated with an unchanged $125 price target.

Latest Ratings for AAPL

DateFirmActionFromTo
Aug 2020WedbushMaintainsOutperform
Aug 2020Wells FargoMaintainsOverweight
Aug 2020B of A SecuritiesDowngradesBuyNeutral

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