With the iPhone 15 launch just a day away, expectations and rumors concerning the next iteration of Apple, Inc.'s AAPL flagship hardware device are coming in thick and fast.
In a note published on Monday, KeyBanc Capital Markets analyst John Vinh weighed in on various aspects of the newest iPhone.
Meaningful Upgrade: Vinh expects the iPhone 15 to represent a meaningful upgrade cycle from a features perspective, with key upgrades in Pro series models likely to be:
- a new 3nm A17 processor
- Periscope lens for the Pro Max
- Wi-Fi 6E
- Mixed-material casting, comprising titanium and aluminum
The analyst also expects the regular iPhone 15/15 Plus to have feature upgrades such as the A16 processor, dynamic island, and USB-C port.
Despite the major upgrades, builds will likely be down by 4% year-over-year in the second half versus the iPhone 14 series, Vinh said. He blamed it on the lower CIS yields at supply chain partner Sony.
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Price Hike In The Offing? KeyBanc has not factored in the level of price increases suggested by reports, which have called for a $200 price increase for the Pro Max model to $1,299 and a $100 increase for the Pro variant to $1,099, Vinh said. The firm expects the unit average selling prices to move higher in the first quarter of fiscal year 2024, he added.
“If a price increase does occur, we believe there could be some modest demand destruction toward high-end devices, and mix, which has shifted toward ~50% high end, to shift back toward the “Plus” and standard model,” the analyst said.
Vinh, however, said a price increase is not justifiable, as consumers may not find the features meaningfully different. Some of the features such as the USB-C Vs. Lightning Port could turn consumers away, he said. Also, demand in the U.S. is likely to be relatively soft, given upgrade activity and the macro environment, he added.
US Carrier Promotions: Vinh noted that T-Mobile US, Inc. TMUS and AT&T, Inc. T aggressively promoted the iPhone 14, offering their best deals to new and existing customers, Verizon, Inc. VZ offered only an "iPhone 14 on US" to new customers.
The analyst said a muted promotional environment is likely, where the best deals are provided to new customers resulting in lower upgrade rates from the U.S. Carriers.
Vinh maintained an Overweight rating and a $200 price target for Apple shares.
Apple shares rose 0.84% to $179.67 in premarket trading on Monday, according to Benzinga Pro data.
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