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What's The 'Pig In A Python' Theory And What Does It Have To Do With Apple's New iPhone?

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What's The 'Pig In A Python' Theory And What Does It Have To Do With Apple's New iPhone?

UBS analyst Steven Milunovich isn’t concerned by a possible delay in iPhone shipments, and reiterated a Buy rating on Apple Inc. (NASDAQ: AAPL) shares with a $170 price target.

Milunovich said iPhone sales are a “pig in a python,” defined by the Oxford English Dictionary as a “sharp statistical increase represented as a bulge in an otherwise level pattern.”

In other words, iPhone demand is swelling and it will soon be apparent during the iPhone 8 super cycle.

Milunovich cited a wave of iPhone 6 and 6s users who bought in fiscal 2015, but passed over the iPhone 7 in favor of waiting for the iPhone 8.

Credit Suisse’ Kulbinder Garcha also highlighted a “degree of pent up demand” in a similarly bullish note. Like Milunovich, Garcha rates Apple shares at Buy with a $170 price target.

Look To Guidance For Release Dates

Milunovich said investors should watch for guidance for the next quarter for a sense of when the OLED and LCD display models of the new iPhone will ship.

The large sales figure would indicate that the iPhone 8 will ship on time, a lower figure indicating a delay.

Guidance below $49 billion would likely mean a late release for the LCD model or possibly a price cut by $100, according to Milunovich.

The analyst also notes that he will be looking for signs of moderation in iPad sales declines and whether momentum for Watch has continued, two products that have not received much attention from the Street lately.

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Latest Ratings for AAPL

DateFirmActionFromTo
Nov 2019DowngradesHoldSell
Nov 2019Initiates Coverage OnOutperform
Oct 2019MaintainsOutperform

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