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Apple's Next iPhone Launch Cycle Might Resemble That Of iPhone 4

Apple's Next iPhone Launch Cycle Might Resemble That Of iPhone 4
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Morgan Stanley’s Katy Huberty reiterated an Overweight rating on Apple Inc. (NASDAQ: AAPL) with a price target raised from $177 to $182.

Her note considered the effect of a delay in iPhone 8 shipments, which are expected to go out in October rather than the usual September.

The delay will mean a weaker end to the year than previously expected, but it will also drive earnings higher for fiscal 2018.

Huberty expects the delay because of the substantial technology upgrades packed into the new phone, notably an OLED display and sensors to support augmented reality. Supplier checks by Morgan Stanley’s Greater China Technology Hardware team also support this view.

New Phone, Old Data

The change in shipping date suggests that 6 million phones that would have been sold in fiscal 2017 will move to be included in 2018’s count.

The iPhone 4’s launch serves as the best model for gauging the delay’s effect on earnings, as it was the only other iPhone to ship in October.

During the iPhone 4’s cycle, September shipments declined 16 percent quarter-over-quarter, similar to China Hardware Team’s estimated 18 percent decline quarter-over-quarter for the iPhone 8.

In suit, December shipments for the iPhone 4 increased by 117 percent, compared to the 72 percent three-year seasonality, and this December’s forecast shows a 169 percent quarter-over-quarter rise.

Moving further forward, the iPhone 4’s March had the best ever seasonality, indicating that March 2018 will show near the same result.

Apple will announce its third-quarter 2017 results on August 1.

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Jan 2019CitigroupMaintainsBuyBuy
Jan 2019NomuraMaintainsNeutralNeutral
Jan 2019Canaccord GenuityMaintainsBuyBuy

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