Analyst: Demand For Apple's New iPhone 'Decent Amid Low Expectations'

Even amid the not-so-optimistic outlook for Apple Inc. AAPL's flagship iPhone, UBS said demand remains decent.

The Analyst

Analyst Timothy Arcuri maintained a Buy rating on Apple with a $235 price target.

The Thesis

Apple iPhone sales aren't likely to see shortfalls as they did in the last year given muted expectations from the company and the supply chain, Arcuri said in a Thursday note. (See his track record here.) 

The wait times for the iPhone 11/Pro relative to last year's iPhone XR/Xs have been longer, and supply for the LCD model has been much more modest, the analyst said. 

Arcuri estimates a 5.3% decline in second-half iPhone shipments compared to Street estimates for a 4.4% drop.

Following a visit to 38 Asian countries last week, UBS raised its smartphone market estimate for fiscal year 2019 from a 7% decline to a 5% decline.

The procurement of new iPhone models are tracking to flat to 12% year-over-year for the second half of calendar year 2019, suggesting 60 million to 68 million units, he said. 

UBS sees a minor impact of less than 1-2% to Apple's EPS from the Apple TV+.

" ... While it does effectively transfer revenue from hardware to services, it has no impact on cash flow and should help accelerate attach for an important new services initiative." 

Price Action

Apple shares were down 0.35% at $220.25 at the time of publication Thursday. 

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Photo courtesy of Apple.