As Apple still struggles to meet iPhone 6 demand, Canaccord raises price target to $135

Posted:
in AAPL Investors edited December 2014
Investment firm Canaccord Genuity raised its price target on shares of Apple to $135 on Tuesday, citing its latest survey showing supply constraints for the higher-capacity iPhone 6 and iPhone 6 Plus, signaling higher average selling prices and greater profits for the company's handset division.



In a note to investors, a copy of which was provided to AppleInsider, analyst Michael Walkley revealed the results of his latest November smartphone survey, which shows continued strong demand for both the iPhone 6 and iPhone 6 Plus. In particular, Apple has still not caught up with demand for the larger-capacity 64- and 128-gigabyte models.

With continued demand for more storage, Walkley has increased his average selling price assumptions for the iPhone, as well as his overall Apple estimates. He now predicts that the iPhone will have an average selling price of $700, on sales of 63 million units, in the December quarter.

Walkley's survey found that the 4.7-inch iPhone 6 was the top-selling handset at the major four U.S. carriers in November --?AT&T, Verizon, Sprint and T-Mobile. Taking second place was the 5.5-inch iPhone 6 Plus, while the Samsung Galaxy Note 4 came in third.




A survey of 75 AT&T stores conducted by Canaccord Genuity on Nov. 26 found that 44 percent had the 16-gigabyte iPhone 6 in stock, but just 8 percent had the 64-gigabyte model, and none had it in a 128-gigabyte capacity.

Store representatives for all four carriers indicated that the 64-gigabyte capacity has proven extremely popular with consumers. Those models are said to remain constrained, with wait times stretching as long as a few weeks depending on the carrier and iPhone model.

With strong demand for more expensive iPhone models, Walkley has increased his price target on AAPL to $135, with a fiscal 2015 earnings per share estimate of $8.50. He also believes consumer preferences for higher-capacity, more expensive iPhone models will continue for future upgrade cycles, allowing Apple to reap the benefits for years to come.

"We believe Apple will continue to garner the majority share of handset industry profits and maintain and even grow its share of high-end smartphone market with the new larger screen SKUs continuing to sell well," the analyst wrote. "In fact, based on our analysis, we believe Apple dominated the handset industry operating profits and captured a remarkable 86% of (third-quarter) 2014 handset industry profits and should grow its share of industry profits during Q4/2014."
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Comments

  • Reply 1 of 42
    rogifanrogifan Posts: 10,669member
    Pacific Crest downgraded the stock and Deutsche Bank put out a cautious research note. Probably why the stock is down today when the overall market is up. Will these guys have egg all over their faces two months from now?

    http://seekingalpha.com/news/2155815-apple-lower-following-cautious-pac-crest-deutsche-notes
  • Reply 2 of 42
    Quote:

    Originally Posted by Rogifan View Post



    Pacific Crest downgraded the stock and Deutsche Bank put out a cautious research note. Probably why the stock is down today when the overall market is up. Will these guys have egg all over their faces two months from now?



    http://seekingalpha.com/news/2155815-apple-lower-following-cautious-pac-crest-deutsche-notes



    I have to wonder who's profiting from the Deutsche Bank analyses. They've been consistently negative about Apple for some time.

  • Reply 3 of 42
    Quote:
    Originally Posted by Rogifan View Post



    Pacific Crest downgraded the stock and Deutsche Bank put out a cautious research note. Probably why the stock is down today when the overall market is up. Will these guys have egg all over their faces two months from now?



    http://seekingalpha.com/news/2155815-apple-lower-following-cautious-pac-crest-deutsche-notes

     

    I read the downgrade. It appears that they realize there will be substantial growth in the current quarter. They are basing their analysis on future quarters.

     

    At least this helps to explain yesterday's sharp decline. I thought it was more than just automated trading.

  • Reply 4 of 42

    People in the biz will tell you that the tech industry is not for the faint of heart. That it is volatile, and un-understandable.

     

    I don't think investors who have dealt with different industries get the tech industry (not that I do BTW). So I suspect that is why you will get such a disparity in predictions. They're throwing darts, in the dark, at a board that is moving and may or may not be there. 

     

    So you get a lot of the 'broken clock is right twice a day' phenomenon, but just because Deutche Bank or Pac Crest get it right once doesn't mean they understood why they were right. 

     

    I guess my point is- it's really hard to find someone who understands the tech industry enough to make these kind of predictions. Add to that some subconscious emotional investment in companies like Apple and things really get skewed. 

     

    My view is that the tech segment changes so much that what makes a good company is one that can roll with or even create these changes. Being willing to embrace the new stuff when it's viable and cut off the old stuff when it's not. So far I trust Apple to do this, and you can see what happens to the companies that don't. 

     

    I'm no expert BTW. Which is probably obvious. But the 'experts' out there aren't either.

  • Reply 5 of 42
    rogifanrogifan Posts: 10,669member
    I read the downgrade. It appears that they realize there will be substantial growth in the current quarter. They are basing their analysis on future quarters.

    At least this helps to explain yesterday's sharp decline. I thought it was more than just automated trading.

    Except Pacific Crest has been bearish on Apple for a while. I see the stock is rebounding a bit - was down over $2, now down about 20 cents.
  • Reply 6 of 42
    Quote:
    Originally Posted by Rich Gregory View Post

     

    People in the biz will tell you that the tech industry is not for the faint of heart. That it is volatile, and un-understandable.

     

    I don't think investors who have dealt with different industries get the tech industry (not that I do BTW). So I suspect that is why you will get such a disparity in predictions. They're throwing darts, in the dark, at a board that is moving and may or may not be there. 

     

    So you get a lot of the 'broken clock is right twice a day' phenomenon, but just because Deutche Bank or Pac Crest get it right once doesn't mean they understood why they were right. 

     

    I guess my point is- it's really hard to find someone who understands the tech industry enough to make these kind of predictions. Add to that some subconscious emotional investment in companies like Apple and things really get skewed. 

     

    My view is that the tech segment changes so much that what makes a good company is one that can roll with or even create these changes. Being willing to embrace the new stuff when it's viable and cut off the old stuff when it's not. So far I trust Apple to do this, and you can see what happens to the companies that don't. 

     

    I'm no expert BTW. Which is probably obvious. But the 'experts' out there aren't either.


     

    Pretty much. It's rare to get someone in business who understands technology, but also rare to get people in technology who understand business. That's why you have people with great ideas starting companies that fail, or launching great products that flop; while at the same time having great tech companies run by seeming morons that don't get the products they sell.

     

    I try to understand both sides. Don't claim to be perfect by any means, but I put in a good effort. Of course, talking about things from a business angle on most tech blogs is nigh verboten.

  • Reply 7 of 42

    We can always find something somewhere at any given time to justify any up, down, or sideways move on any heavily traded stock.

     

    This is all just noise if one's investing horizon is longer than a few days.

  • Reply 8 of 42
    apple ][apple ][ Posts: 8,743member
    Quote:
    Originally Posted by anantksundaram View Post

     

    We can always find something somewhere at any given time to justify any up, down, or sideways move on any heavily traded stock.

     

    This is all just noise if one's investing horizon is longer than a few days.


     

    Agreed.

     

    I pretty much ignore anything that any analysts have to say.

     

    I also stay away from any gossip sites like seeking alpha, business insider etc.

  • Reply 9 of 42
    apple ][apple ][ Posts: 8,743member
    Quote:

    Originally Posted by Rogifan View Post





    Except Pacific Crest has been bearish on Apple for a while. I see the stock is rebounding a bit - was down over $2, now down about 20 cents.



    They're the morons who put out a price target of $100 in September.

     

    And I believe that your first link to seeking alpha is citing that same September prediction, so it's not even new news. They're just rehashing old news.

  • Reply 10 of 42

    Seeking Alpha... Loved and hated that site. Hated it because they were so full of shit. Loved it, because I just did the opposite of whatever they said and made a load of money :) Reliably wrong.

     

    Had a pleasant surprise earlier. I totally forgot that I had put a short on Apple yesterday, and was fuming all day that I didn't do it. Logged in earlier only to realise that I had shorted after all. Idiot! Happy idiot.

  • Reply 11 of 42
    clemynxclemynx Posts: 1,510member
    Does someone think that we'll get an iPhone 6S that looks just like the 6, or can we hope that they at least make the camera better?
  • Reply 12 of 42

    In Ottawa, Canada when I was buying my iPhone 6, the Apple store employee was telling me they constantly run out of both the iP6 & iP6+

     

    He said it's really spotty. People come in all the time and can't get the exact one they want.

     

    APPL investor music to my ears.8-)

  • Reply 13 of 42
    Originally Posted by ClemyNX View Post

    Does someone think that we'll get an iPhone 6S that looks just like the 6, or can we hope that they at least make the camera better?

     

    It’ll look the same and the camera will be better.

  • Reply 14 of 42
    rogifanrogifan Posts: 10,669member
    apple ][ wrote: »

    They're the morons who put out a price target of $100 in September.

    And I believe that your first link to seeking alpha is citing that same September prediction, so it's not even new news. They're just rehashing old news.

    Just listening to this clown on CNBC right now and it's the same meme we've heard for years now...Apple is doomed because it won't go downmarket and the high end is saturated blah blah blah. How can anyone think Apple getting into a race to the bottom with iPhone would be good for the company. Its not working for Samsung, what makes these clowns think it will work for Apple?
  • Reply 15 of 42
    Quote:

    Originally Posted by Rogifan View Post





    Just listening to this clown on CNBC right now and it's the same meme we've heard for years now...Apple is doomed because it won't go downmarket and the high end is saturated blah blah blah. How can anyone think Apple getting into a race to the bottom with iPhone would be good for the company. Its not working for Samsung, what makes these clowns think it will work for Apple?



    They don't care if it works. They want people to do what they say. Because they are right and everyone else is wrong.

  • Reply 16 of 42
    Quote:

    Originally Posted by ClemyNX View Post



    Does someone think that we'll get an iPhone 6S that looks just like the 6, or can we hope that they at least make the camera better?

     

    I'm REALLY hoping for this. The optical image stabilization in the 6+ is what I wanted but I didn't want that big of a phone.

     

    When you think about it, cameras still have a long way to go: http://petapixel.com/2014/11/24/cnn-cameraman-pits-the-iphone-6-up-against-his-standard-issue-broadcast-camera

     

    I don't know how long it will take to get to broadcast (and beyond) quality but I'm excited to see. The thing I can't wrap my head around is whether or not smartphones will truly hit a wall for improvements because so much of it comes down to the lens... And on phone they're so tiny!

  • Reply 17 of 42
    Quote:

    Originally Posted by allmypeople View Post

     

    The thing I can't wrap my head around is whether or not smartphones will truly hit a wall for improvements because so much of it comes down to the lens... And on phone they're so tiny!


     

    Hawk's eyes are really good, and tiny. If a Hawk can do it, Apple can :)

  • Reply 18 of 42
    sdw2001sdw2001 Posts: 17,080member

    Just got my 6 (64 GB) yesterday from an Apple store in DE.  I was trading my locked ATT iPhone 5 32GB.  I was going to order online, but you can't use the Apple gift card credit towards the purchase that way.  Got $180 from Apple vs. $115 from another trade-in site.  

     

    Higher capacity phones are indeed an issue.  I couldn't find the 64GB iPhone 6 in any local Apple store according to online stock checkers.  The 6 seems more popular than the plus does at the moment.  

     

    Also, the entry level phone is a joke.  16GB?  That's half of my iPhone 5.  Apple is really trying to pull a fast one there.  

  • Reply 19 of 42
    Quote:



    Originally Posted by Rogifan View Post





    Except Pacific Crest has been bearish on Apple for a while. I see the stock is rebounding a bit - was down over $2, now down about 20 cents.

     

    PC wasn't the only name mentioned in that release.

     

    Regardless... I think that if drop yesterday was just from automated trading then AAPL would have recovered more ground than it did.

     

    Obviously, somebody sees this as a buying opportunity.

  • Reply 20 of 42
    Quote:

    Originally Posted by SDW2001 View Post

     

    Just got my 6 (64 GB) yesterday from an Apple store in DE.  I was trading my locked ATT iPhone 5 32GB.  I was going to order online, but you can't use the Apple gift card credit towards the purchase that way.  Got $180 from Apple vs. $115 from another trade-in site.  

     

    Higher capacity phones are indeed an issue.  I couldn't find the 64GB iPhone 6 in any local Apple store according to online stock checkers.  The 6 seems more popular than the plus does at the moment.  

     

    Also, the entry level phone is a joke.  16GB?  That's half of my iPhone 5.  Apple is really trying to pull a fast one there.  




    When I did some spot checking of Apple Store stock, the 64GB iPhone 6 in Space Gray was the hardest to find. I'm glad I got mine launch day. I really don't care for the gold or silver iPhones (but I like the gold iPad, go figure).

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