Piper Jaffray lowers March iPhone estimates to 55M, sees return to growth in fall 2016

Posted:
in AAPL Investors edited January 2016
Ahead of Apple's upcoming quarterly earnings report, investment firm Piper Jaffray lowered iPhone shipment estimates to 55 million units for the current quarter, but maintains AAPL is the year's top stock pick.




In a note to investors on Monday, analyst Gene Munster estimates Apple to ship 55 million iPhones in the current March quarter, down from previous predictions of 62.5 million units. June quarter expectations are also lower, down from 48.5 million units to 45 million. The downward adjustment is in response to collective circumstantial evidence of slower-than-expected production from Apple's supply chain.

The estimate reduction pulls Apple's revenue expectations to $55.8 billion for March, down from a prior estimate of $60.7 billion. Munster believes Wall Street is expecting revenue of $59.7 billion on 58 million iPhone sales.

Over the past month, a number of investment firms cut iPhone estimates on supply chain chatter claiming Apple recently trimmed parts orders. Morgan Stanley was among the first to slash expectations, followed by RBC Capital Markets, J.P. Morgan and FBR & Co.

A Nikkei report last week put numbers to rumors, saying suppliers are bracing for decreased iPhone 6s parts orders that could be 30 percent lower than initial models. Actual supplier guidedowns were in the 10 to 15 percent range, Munster says.

"While Apple has repeatedly stated in the past that the changes in orders from any given supplier are not indicative of the health of the iPhone business overall, we believe that the combination of three supplier guidedowns (Dialog Semiconductor, Qorvo and Cirrus Logic) as well as the Nikkei story suggesting production cuts from last week are too much collective evidence to not adjust iPhone expectations," Munster writes.

The statement sends a different message than a note Munster issued last week reminding investors that supply chain rumors have no bearing on actual sales. That report did not detail Piper Jaffray's March estimates.

If March quarter iPhone sales come in under 61.17 million units, it will be the first year-over-year decline since the device launched in 2007. There are fears that Apple has reached "peak iPhone" and is seeing a natural slowdown in sales as mature markets reach saturation.

As for the just ended quarter, Munster expects revenue of $76.5 to $77.5 billion on sales of 75 to 76 million iPhones, 5.8 million Macs and 17.5 million iPads. He pegs gross margins at 40 percent.

Finally, Munster estimates Apple to have sold 6 million Apple Watch units in the recently ended December quarter. The analyst is looking to 2017 as a "breakout year" for Watch, saying he expects 20 million units to ship in 2016, followed by 40 million units in 2017.

Looking ahead, Munster sees iPhone returning to 5 percent year-over-year growth in the quarters ending September and December, as Apple is widely expected to maintain its usual yearly iPhone hardware refresh cycle this fall. For "iPhone 7," Munster predicts Apple might use 3D Touch in place of a home button and could incorporate a sapphire glass display.

Piper Jaffray maintains an Overweight rating for AAPL with a $179 price target.
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Comments

  • Reply 1 of 39
    jfc1138jfc1138 Posts: 3,090member
    Nikkei reported 5s production to "plummet" by Fifty Percent for the March 2013 quarter. Did. Not. Happen. 

    Doesnt AI even read their own stuff?
    "Analyst: Nikkei iPhone 6s supplier story says nothing of iPhone demand; site wrong before in 2013
    Tuesday, January 5, 2016 6:46 PM

    Iirc (I should have bookmarked the link, apologies) Cirrus reported an upward surge of 46% for Sept Qtr of last year. Qorvo, iirc, reported an upswing YoY for that quarter. So they were front loaded for the holiday sales demand and have now backed off?

    oh and speaking of that quarter. What ever happened to the holiday quarter? Skipped that result have we?

    oh and Cirrus Logic? Been there, didn't do that. 
    "

    Cirrus Logic's drop in revenue points to decline in Apple iPhone sales

    Posted: 17 Apr 2013, 22:42, by Alan F.

    edited January 2016
  • Reply 2 of 39
    This note just shows what a herd mentality there is on Wall Street. One minute Munster says you can't read anything into supply-chain reports, the next Piper Jaffray is lowering iPhone estimates because of these same supply chain reports. Does Munster really believe believe people aren't buying the 6S because it doesn't have a sapphire screen? He thinks a 3D Touch will replace the home button even though there have been zero rumors about that and zero evidence that Apple is ready to integrate Touch ID into the display? There is not one Wall Street analysts who has provided a compelling reason why 6S sales are soft but 7 sales won't be.
    badmonk
  • Reply 3 of 39
    jfc1138 said:
    oh and speaking of that quarter. What ever happened to the holiday quarter? Skipped that result have we?

    It's called moving the goalposts. And that's why Apple is perpetually doomed. If they're wrong about March they'll just say well June's going to be bad; if they're wrong about June the'll just push the bad news to September. We'll get the typical response we always do after a great quarter; it's not about the past it's about the future and the future is always bleak.
    edited January 2016 teejay2012palominebobschlobbadmonk
  • Reply 4 of 39
    sflocalsflocal Posts: 5,728member
    sog35 said:
    I hate these assholes.
    I wish Tim Cook would just come out and shut these fucers up.


    I wish you would just shut up as well.
    jonlfastasleeplord amhranRayz2016revenantnetmagebrucemcacgmphai46dasanman69
  • Reply 5 of 39
    levilevi Posts: 344member
    Mark Hibben at Seeking Alpha always provides a reasonable, well thought out take on Apple. I recommend his Jan 6th article 'Apple's App Economy Indicates Increasing iPhone Sales Momentum' in which he discusses the Nikkei report in light of recent holiday app store sales. He often credits Apple Insider and Daniel Eran Dilger in his Apple articles. From the article: "If the rumors are just nonsense, why doesn't Apple simply make an announcement setting the record straight? I've often read complaints to that effect from investors. Certainly, Apple could do that. However, I think it would be ill-advised. Apple is already the most transparent of the large technology companies, reporting specific unit shipments for each of its product categories, which its large competitors such as Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) and Samsung (OTC:SSNLF) do not. For Apple to disclose its specific sales forecasts for the coming quarter would be unprecedented, and potentially provide some strategic advantage to its competitors. One possibility is that the negative supply chain rumors are an attempt to flush out just such a disclosure from Apple. If that's the case, so far Apple isn't falling for it."
    adybflaneurradarthekatmike1palominebrucemcai46
  • Reply 6 of 39
    Well, Piper Jaffray is just lowering expectation a bit and making it easier for Apple to beat.

    "Piper Jaffray maintains an Overweight rating for AAPL with a $179 price target."

    It does not get any better than this folks.
  • Reply 7 of 39
    https://www.fiksu.com/resources/ios_trackers

    Fiksu usage stats upto last week points to no slowdown in growth. The combined iphone 6/6p/6S/6Sp/5S (which is the portfolio being actively marketed now) is doing extremely well.

    All the analysts are focusing on is the 6S vs 6, and yes, the cheaper 6 series is doing marginally better than 6S, but that is not unusual nor material for total shipments, which includes models that are both 1 and 2 years old.

    Hell, they continued to sell the 4S until Jan 2015, almost 3 1/2 years after it was released... That was an incredible cash cow (and the 5e or 6c will replace that role as bottom entry in March - only much better than the current bottom entry which is the 5c/5s).

    In 2 weeks, Tim Cook will once again defy all analyst pundits and prove their own guidance slightly conservative as usual...
    edited January 2016 palominebadmonk
  • Reply 8 of 39
    None of the analysts are factoring in the potential of an Apple car? They are hiring engineers by the 1000's and even Musk at Tesla is starting to downplay the threat of an Apple car. And how about that headquarter they just built? Why would you build a headquarter larger than Pentagon to house a few engineers working on the next iPhone 7...?

    Surely something big is coming and will put iPhone growth concerns to shame (and the iPhone will likely continue to do well...)

    Apple is trading at a forward PE ex cash of ~7 based on conservative forecasts that are limited to existing and known products. Other companies would be trading at 5-10 times that PE based on unfounded rumors of possible future revenue streams.

    ...who said Wall Street manipulation???
    edited January 2016 radarthekatlevipalomine
  • Reply 9 of 39
    sog35 said:
    I hate these assholes.
    I wish Tim Cook would just come out and shut these fucers up.


    We know. You've made mention of this recently
    slprescott
  • Reply 10 of 39
    JamesBB said:
    None of the analysts are factoring in the potential of an Apple car?  
    . . .

    ...who said Wall Street manipulation???
    What about the Apple Plane and the Apple Spaceship?

    Surely they will factor in the Apple Space Stations on Vulcan and Romulus.  
    cnocbui
  • Reply 11 of 39
    "As for the just ended quarter, Munster expects revenue of $76.5 to $77.5 billion on sales of 75 to 76 million iPhones, 5.8 million Macs and 17.5 million iPads. He pegs gross margins at 40 percent"

    Wow, this guy must have been up half the night burning the midnight oil, tapping away at his calculator, checking inventory and sales channels, etc to have generated such specific numbers. Oh, hang on -

    "Apple is providing the following guidance for its fiscal 2016 first quarter:
    • revenue between $75.5 billion and $77.5 billion
    • gross margin between 39 percent and 40 percent"
    Really, what is the point in these people ? Do their clients actually PAY for this indepth analysis ?

    So in 2 weeks' time when Apple give their forward guidance - free of charge - which will either prove correct or conservative, how long will it take these guys to chunter on before coming out with their new predictions that are pretty much identical ?

    Let's not forget that this current Apple forecast shows income growth while also including 5+% added costs due to currency fluctuations.

    palomine
  • Reply 12 of 39
    hammerd2 said:

    Wow, this guy must have been up half the night burning the midnight oil, tapping away at his calculator, checking inventory and sales channels, etc to have generated such specific numbers. 

    So in 2 weeks' time when Apple give their forward guidance - free of charge - which will either prove correct or conservative, how long will it take these guys to chunter on before coming out with their new predictions that are pretty much identical ?
    Plus... I would imagine Apple know EXACTLY how many iPhones get sold every single day.

    I bet there is a counter on Tim Cook's desk that counts up every time a new iPhone gets activated on Apple's servers.  (over 800,000 times a day this quarter)

    Meanwhile... Munster is out there sniffing the dirt for answers... "estimating" iPhone sales across the entire planet.


    edited January 2016 radarthekat
  • Reply 13 of 39
    JamesBB said:
    None of the analysts are factoring in the potential of an Apple car?  
    . . .

    ...who said Wall Street manipulation???
    What about the Apple Plane and the Apple Spaceship?

    Surely they will factor in the Apple Space Stations on Vulcan and Romulus.  
    Sure. Your sarchastic blurp sounds like you belong to those who thought the ipod was the end station a few years back... Not a grain of foresight (or insight).
    edited January 2016
  • Reply 14 of 39

    hammerd2 said:
    "As for the just ended quarter, Munster expects revenue of $76.5 to $77.5 billion on sales of 75 to 76 million iPhones, 5.8 million Macs and 17.5 million iPads. He pegs gross margins at 40 percent"

    Wow, this guy must have been up half the night burning the midnight oil, tapping away at his calculator, checking inventory and sales channels, etc to have generated such specific numbers. Oh, hang on -

    "Apple is providing the following guidance for its fiscal 2016 first quarter:
    • revenue between $75.5 billion and $77.5 billion
    • gross margin between 39 percent and 40 percent"
    Really, what is the point in these people ? Do their clients actually PAY for this indepth analysis ?

    So in 2 weeks' time when Apple give their forward guidance - free of charge - which will either prove correct or conservative, how long will it take these guys to chunter on before coming out with their new predictions that are pretty much identical ?

    Let's not forget that this current Apple forecast shows income growth while also including 5+% added costs due to currency fluctuations.

    Tim Cook is the best Apple analyst hands down, although he tends to be slightly conservative in his estimates.
  • Reply 15 of 39
    josujosu Posts: 217member
    sog35 said:
    I hate these assholes.
    I wish Tim Cook would just come out and shut these fucers up.


    I honestly thought that Gene Munster was acting as the "de facto" spokesman of Apple lately, his was defending Apple, and constantly dismissing lower iPhone sales, I was waiting to see a new post from you to tell you, probably I was wrong.

    Even if it hurts to say, those guys can be right, but have in mind that all this surrounds iPhone sales, not overall revenue growth. And if Apple have something in the pipeline that can sustain the grow, they will not get out and said it well in advance so de "rip-offers" out there can copycat it before their launch.

    On the other hand Munster miss big in his sales forecasts of the first weekend of the iPhone 5s. And his model is primarily based on US channel checks, so as China gets a bigger role in Apple sales his forecasts get wrong. I mention the 5s because is the one that was launched in China the first week end of sales before the 6s. And that looks to me as the source of his past mistake.
  • Reply 16 of 39
    josujosu Posts: 217member

    hammerd2 said:
    "As for the just ended quarter, Munster expects revenue of $76.5 to $77.5 billion on sales of 75 to 76 million iPhones, 5.8 million Macs and 17.5 million iPads. He pegs gross margins at 40 percent"

    Wow, this guy must have been up half the night burning the midnight oil, tapping away at his calculator, checking inventory and sales channels, etc to have generated such specific numbers. Oh, hang on -

    "Apple is providing the following guidance for its fiscal 2016 first quarter:
    • revenue between $75.5 billion and $77.5 billion
    • gross margin between 39 percent and 40 percent"
    Really, what is the point in these people ? Do their clients actually PAY for this indepth analysis ?

    So in 2 weeks' time when Apple give their forward guidance - free of charge - which will either prove correct or conservative, how long will it take these guys to chunter on before coming out with their new predictions that are pretty much identical ?

    Let's not forget that this current Apple forecast shows income growth while also including 5+% added costs due to currency fluctuations.

    Those guys usually use statistical models that use to be right or highly accurate in the past. But in Piper Jaffray case, if my memory is not betraying me, it starts to falter when China started to be the primary growth engine for Apple sales.

    Anyway I agreed with you, the guy has get average of the lower higher Apple own guidance and kept the higher, not to much, for sure.
  • Reply 17 of 39
    josujosu Posts: 217member

    JamesBB said:

    hammerd2 said:
    "As for the just ended quarter, Munster expects revenue of $76.5 to $77.5 billion on sales of 75 to 76 million iPhones, 5.8 million Macs and 17.5 million iPads. He pegs gross margins at 40 percent"

    Wow, this guy must have been up half the night burning the midnight oil, tapping away at his calculator, checking inventory and sales channels, etc to have generated such specific numbers. Oh, hang on -

    "Apple is providing the following guidance for its fiscal 2016 first quarter:
    • revenue between $75.5 billion and $77.5 billion
    • gross margin between 39 percent and 40 percent"
    Really, what is the point in these people ? Do their clients actually PAY for this indepth analysis ?

    So in 2 weeks' time when Apple give their forward guidance - free of charge - which will either prove correct or conservative, how long will it take these guys to chunter on before coming out with their new predictions that are pretty much identical ?

    Let's not forget that this current Apple forecast shows income growth while also including 5+% added costs due to currency fluctuations.

    Tim Cook is the best Apple analyst hands down, although he tends to be slightly conservative in his estimates.
    Yes, but remember in early 2013 those guys forecasted an big slowdown and a decline in revenue and profits and the last actually happened, Apple profits declined in 2013, so they are not as mislead as we would like.

    But there's a silver lining, In late 2012 Apple management cashed their stock options, so they probably knew what will happen, this time they don't have do it. Not only that, they extended the stock option program to more management levels, hardly a sign of trouble ahead, if only because as the top management levels, mid levels have enough knowledge of what is happening to react over this if they see no growth in the future, and no stock growth potential. Also, even though its cautions, most analyst keep or had trimmed slightly its price targets, so they don't see the scenario as grim as they saw it in 2013. And remember they only where right in profits, and that was related to lower gross margins than usual than with sales growth. Now the gross margins are in the 40% range, Apple usual margins
    edited January 2016 brahmal
  • Reply 18 of 39
    josu said:
    sog35 said:
    I hate these assholes.
    I wish Tim Cook would just come out and shut these fucers up.



    Even if it hurts to say, those guys can be right
    A broken clock is right twice a day. :smile: 

    Make enough predictions and one of them will be correct every so often.
    edited January 2016
  • Reply 19 of 39
    JamesBB said:
    What about the Apple Plane and the Apple Spaceship?

    Surely they will factor in the Apple Space Stations on Vulcan and Romulus.  
    Sure. Your sarchastic blurp sounds like you belong to those who thought the ipod was the end station a few years back... Not a grain of foresight (or insight).
    On the contrary, the people cursing Piper Jaffray above don't understand what he is doing unless they are all short AAPL; which I doubt.
    This specific note to investors is a good thing if they are longs AAPL stock.  He lowers expectations but maintains his high rating and very high price target.  This will make the stock go up.
  • Reply 20 of 39
    sog35 said:
    I hate these assholes.
    I wish Tim Cook would just come out and shut these fucers up.


    If you are long AAPL you should be thankful to Piper Jaffray.  This note to customers lowering the March and June quarters expectations will make it easier for Apple to beat.  The fact that he maintains his high rating and price target is a vote of confidence that tells his clients to Buy! Buy! Buy!
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