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BofA: Should Apple Cut iPhone Prices This Year?

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BofA: Should Apple Cut iPhone Prices This Year?
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With Apple Inc. (NASDAQ: AAPL) reporting a 1-percent drop in iPhone shipments in February, one Wall Street analyst asked whether the solution is lower prices. 

The Analyst

Bank of America analyst Wamsi Mohan reiterated a Buy rating on Apple with a $220 price target.

The Thesis

The three new iPhones that Apple reportedly plans to launch in 2018 give the company plenty of pricing flexibility, Mohan said in  a Friday note.

Apple is reportedly planning a larger version of the iPhone X with a 6.5-inch OLED screen, a 5.8-inch OLED iPhone X successor and an LCD screen phone this year. The price of the “iPhone X Plus” model will likely range between $1,149 and $1,199, Mohan said. Apple will likely drop the price of the “iPhone XS” model by up to $100 in an attempt to fill in pricing gaps in the high-end phone spectrum, the analyst said. Apple could also choose to target the $300-to-$499 price range with an updated SE model.

Apple investors shouldn’t worry too much about any lower-priced models cannibalizing premium sales, Mohan said. 

“While one can argue that availability of ‘good enough’ iPhones at lower price points can cannibalize sales of high-end phones, purchasing behavior has driven continued strength at the high end of the portfolio, which is driving share growth in the $600-plus category." 

Price Action

The market certainly doesn’t seem too concerned with disappointing iPhone X sales. Apple stock is up another 4.1 percent so far in 2018.

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Photo courtesy of Apple. 

Latest Ratings for AAPL

DateFirmActionFromTo
Sep 2018Bank of AmericaMaintainsBuyBuy
Sep 2018Morgan StanleyMaintainsOverweightOverweight
Sep 2018DA DavidsonMaintainsBuyBuy

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings

Posted-In: Bank of America iPhone iPhone X Wamsi MohanAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga

 

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