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Another Day, Another Survey On Apple Demand; Positive For iPhone X, Cautious For iPhone 8

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Another Day, Another Survey On Apple Demand; Positive For iPhone X, Cautious For iPhone 8
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Apple Inc. (NASDAQ: AAPL) stock lost around 2 percent last Thursday amid reports of poor iPhone 8 sales — a finding that analysts at UBS may not agree with after conducting their own proprietary survey.

 

UBS's Steven Milunovich maintains a Buy rating on Apple's stock with an unchanged $180 price target as the firm's survey results among potential iPhone customers were "mostly positive" and include:

    1. Buying intentions for the next 90 days are the highest level since the iPhone 6 launch.
    2. Forty-three percent of iPhone buyers are waiting to buy the iPhone X.
    3. Retention rates for the iPhone remain at an all-time high.
    4. The iPhone 8 was a lower percentage of units than prior new September offerings.
    5. IPhone 8 Plus is currently outselling the iPhone 8.

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Any weakness in the iPhone 8 could be attributed to strong anticipation for the iPhone X and not due to a "disappointing cycle," although further data is required to come to this conclusion, Milunovich said in the report. Also, further data surrounding a rebound in China is required, but in the meantime, investors could "ignore" most of the concerning reports from other analysts and media sources.

Finally, the theme during Apple's fiscal fourth quarter (September-ending) earnings report and conference call will be about "understanding the trajectory of the iPhone 8 cycle," the analyst also said.

Milunovich's $180 price target is based on a 16x multiple on his fiscal 2018 EPS estimate of $11.15 which is derived from 5 to 6 percent net operating profit after tax (NOPAT) growth over the next six years at a 20 percent or higher ROIC.

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DateFirmActionFromTo
Nov 2018UBSMaintainsBuyBuy
Nov 2018GuggenheimDowngradesBuyNeutral
Nov 2018Morgan StanleyMaintainsOverweightOverweight

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