Appealing upsell of iPhone 7 Plus predicted help Apple's average selling price exceed expectations

Posted:
in AAPL Investors
While most on Wall Street expect the average selling price of the iPhone will drop this holiday season, RBC Capital Markets believes the greater capabilities of the iPhone 7 Plus could have a counter effect, resulting in stronger-than-anticipated earnings per share for Apple.









iPhone ASPs could bring some so-called "wow factor" to Apple's earnings per share this December quarter, analyst Amit Darnyanani said in a note to investors on Friday. Based on surveys conducted by RBC, he believes iPhone ASPs could be flat or even modestly up year over year, thanks largely to the upsell factor of the dual-camera iPhone 7 Plus.



In addition, he noted that Apple is charging a $120 premium for the iPhone 7 Plus. That's an increase from the past two years, when 5.5-inch models were $100 more expensive than the 4.7 inch versions of new iPhones.



In contrast, current models on Wall Street call for iPhone ASPs to be down between 5 and 10 percent. So even if iPhone prices hold flat year over year, Daryanani believes that could be an upside surprise for investors.

RBC rates shares of AAPL to "outperform" with a target price of $125.

One factor working against iPhone ASPs, however, is Apple's new higher capacity models. Rather than starting with an entry level of 16 gigabytes, Apple's latest models ship with a minimum of 32 gigabytes, which could result in fewer people opting for more spacious models, Daryanani noted.



RBC's survey found that 46 percent of respondents plan to buy Apple's larger 5.5-inch handsets, including both the iPhone 7 Plus and the newly reduced price iPhone 6s Plus. In addition, this year there is a stronger preference for the newer iPhone 7 series than the then-flagship iPhone 6s inspired a year ago.



For the just-concluded September quarter, RBC has forecast revenue at $47.3 billion and earnings per share of $1.68, on sales of 44.2 million iPhones. Those numbers compare to Wall Street at $46.9 billion and $1.66.



And in the December quarter, RBC is calling for sales of 79 million iPhones, which would be a new record for Apple, leading to $78.9 billion in revenue and $3.34 earnings per share. Wall Street, meanwhile, expects about 75 million iPhone sales, revenue of $74.3 billion, and $3.18 EPS.



RBC rates shares of AAPL to "outperform" with a target price of $125.

Comments

  • Reply 1 of 18
    fallenjtfallenjt Posts: 3,976member
    Whatever, someone will find something to troll the stocks anyway...Apple stock should be at $150 while Samsung stock should stumble but...Samsunystock is at all time high with explosive phones and washers...what a joke!
    macxpresscalibadmonkwatto_cobrajony0
  • Reply 2 of 18
    fallenjt said:
    Whatever, someone will find something to troll the stocks anyway...Apple stock should be at $150 while Samsung stock should stumble but...Samsunystock is at all time high with explosive phones and washers...what a joke!
    I don't think the recall losses have been figured in yet.
  • Reply 3 of 18
    macxpressmacxpress Posts: 4,861member
    fallenjt said:
    Whatever, someone will find something to troll the stocks anyway...Apple stock should be at $150 while Samsung stock should stumble but...Samsunystock is at all time high with explosive phones and washers...what a joke!

    So true. Apple could sell 100 million phones this quarter and the next and some negative story would magically be published. 
    edited October 2016 caliDeelronbadmonkwatto_cobrajony0
  • Reply 4 of 18
    qwweraqwwera Posts: 269member
    I was thinking the same thing. I had never bought anything but the 16 gig model and bought an SE earlier this year rather than a 6s.
    With the additional camera and additional storage options, I decided to upgrade my second line to the 7Plus. And I think a lot of people did the same. The black option and cleaner look also helped, so Apple did good this year even though they couldn't deliver their true upgrade this model year.

    So they were able to get TWO purchases from me this year, a year in which they really didn't have true new models ready. And I'm very happy with my purchases. I LOVE MY SE and if Apple never updates the 4" model I'm keeping it until it dies. I love the compactness of it and is my primary on the go phone.

    And likewise I LOVE my 7 plus. I never use my iPad mini anymore and it is an awesome companion with the louder speakers and larger screen to use with maps on a drive or at home reading or watching videos.
    And unlike the 6 series in pink and gold with a tacky ring on the camera and tacky antenna lines, ..in black it looks badass.

    So I hope this little predicament that Apple turned into a positive by upgrading the smaller 5S and making the flagship not look tacky and give the customer MORE value in the storage options...I hope this predicament of not having a new model ready and delivering customers more of what they wanted in the first place. Smaller option, more storage, truly Apple-like design sensibilities in the 7, I hope they relearned what people love Apple devices. 

    Oh and iOS. It can't be stressed enough.  IOS is Apple's greatest asset today and it only keeps getting better. Their chip designs keep getting better.

    They may have dropped the ball on the design side, but their engineering and software development is what has kept Apple as the only true high-end product on he market when it comes to smartphones. 
    They may not look as beautiful on the outside as they once were, but they are still the most beautiful inside where it really counts.


    edited October 2016 canukstormkudugilly33watto_cobra
  • Reply 5 of 18
    canukstormcanukstorm Posts: 1,919member
    qwwera said:
    I was thinking the same thing. I had never bought anything but the 16 gig model and bought an SE earlier this year rather than a 6s.
    With the additional camera and additional storage options, I decided to upgrade my second line to the 7Plus. And I think a lot of people did the same. The black option and cleaner look also helped, so Apple did good this year even though they couldn't deliver their true upgrade this model year.

    So they were able to get TWO purchases from me this year, a year in which they really didn't have true new models ready. And I'm very happy with my purchases. I LOVE MY SE and if Apple never updates the 4" model I'm keeping it until it dies. I love the compactness of it and is my primary on the go phone.

    And likewise I LOVE my 7 plus. I never use my iPad mini anymore and it is an awesome companion with the louder speakers and larger screen to use with maps on a drive or at home reading or watching videos.
    And unlike the 6 series in pink and gold with a tacky ring on the camera and tacky antenna lines, ..in black it looks badass.

    So I hope this little predicament that Apple turned into a positive by upgrading the smaller 5S and making the flagship not look tacky and give the customer MORE value in the storage options...I hope this predicament of not having a new model ready and delivering customers more of what they wanted in the first place. Smaller option, more storage, truly Apple-like design sensibilities in the 7, I hope they relearned what people love Apple devices. 

    Oh oh an iOS. It can't be stressed enough.  IOS is Apple's greatest asset today and it only keeps getting better. Their chip designs keep getting better.

    They may have dropped the ball on the design side, but their engineering and software development is what has kept Apple as the only true high-end product on he market when it comes to smartphones. 
    They may not look as beautiful in the outside as they once were, but they are still the most beautiful inside where it really counts.


    "I LOVE MY SE and if Apple never updates the 4" model I'm keeping it until it dies. I love the compactness of it and is my primary on the go phone.

    Agree.  I love my SE as well and it is still my favorite iPhone design. Hopefully Apple can give the SE at least one more upgrade with at least the A10 Fusion and Force Touch home button. 
    qwweracaliwatto_cobra
  • Reply 6 of 18
    I thought this was a DED article.

    Anyway, keep it up.
    chaithanya008
  • Reply 7 of 18
    mr omr o Posts: 1,046member
    The extra lens makes the iPhone 7+ very appealing: It allows you to take more spontaneous pictures since you don't have to stand right in front of your subject.

    >:x
    edited October 2016 watto_cobra
  • Reply 8 of 18
    boredumbboredumb Posts: 1,415member
    fallenjt said:
    Whatever, someone will find something to troll the stocks anyway...Apple stock should be at $150 while Samsung stock should stumble but...Samsunystock is at all time high with explosive phones and washers...what a joke!
    Perhaps people simply (and perhaps unaccountably) assume there's nowhere for them to go now but "up"...?
  • Reply 9 of 18
    And yet... Consumer Reports says the only reason to be even consider buying an iPhone 7 is the water-resistance.  Nothing else really changed (according to them!).
    qwwerawatto_cobra
  • Reply 10 of 18
    macxpress said:
    fallenjt said:
    Whatever, someone will find something to troll the stocks anyway...Apple stock should be at $150 while Samsung stock should stumble but...Samsunystock is at all time high with explosive phones and washers...what a joke!

    So true. Apple could sell 100 million phones this quarter and the next and some negative story would magically be published. 
    Whenever Apple does sell a lot of any product X the analysts will immediately say that next quarter sales will be down because everyone will already have X product. That sort of reasoning could be used for any product for any company but they make sure they always use that excuse for Apple sales. Of course, what they say is always possible but they can't know that for sure. It's already been stated that iPhones can only be a replacement product at this point. There are no more new consumers left to buy iPhones. It's been said only about a million consumers in the entire sub-continent of India can afford to buy iPhones, so that's basically the very end of Apple's growth. No point in arguing because analysts can make up anything they want about Apple and no one will refute it. Apple is the only major tech company said to have no growth left. All the other major tech companies are being said to have unlimited growth. I guess that's just Apple shareholders' rotten luck.
    watto_cobra
  • Reply 11 of 18
    fallenjt said:
    Whatever, someone will find something to troll the stocks anyway...Apple stock should be at $150 while Samsung stock should stumble but...Samsunystock is at all time high with explosive phones and washers...what a joke!
    I don't think the recall losses have been figured in yet.
    They haven't been figured in yet but losses will be mostly overlooked because they're claiming Samsung's other businesses will make up for any lost Note 7 profits. No doom and gloom for Samsung. They save that meme exclusively for Apple.
    gilly33watto_cobra
  • Reply 12 of 18
    fallenjt said:
    Whatever, someone will find something to troll the stocks anyway...Apple stock should be at $150 while Samsung stock should stumble but...Samsunystock is at all time high with explosive phones and washers...what a joke!
    I don't think the recall losses have been figured in yet.
    Regardless of factoring recall losses, if this catastrophe were of Apple's making, AAPL would be at an all-decade low of around $80.00 by now. Utter joke!
    gilly33watto_cobra
  • Reply 13 of 18
    Are they ever going to ship 7 Pluses?? Everybody I know who ordered is still waiting. November 18th for jet black for me, such a bummer. 
  • Reply 14 of 18
    And yet... Consumer Reports says the only reason to be even consider buying an iPhone 7 is the water-resistance.  Nothing else really changed (according to them!).
    Actually, it appears to be fire-resistance that will soon be the selling point of Apple's latest and greatest, if reports of replacement Note 7 handsets combusting continue to trend...
    watto_cobra
  • Reply 15 of 18
    gilly33gilly33 Posts: 245member
    Are they ever going to ship 7 Pluses?? Everybody I know who ordered is still waiting. November 18th for jet black for me, such a bummer. 
    Hopefully you get yours soon. Jet Black definitely has the longer wait. I just got my matte 7+. It took 3 weeks from order to delivery. 
    davidslaton
  • Reply 16 of 18
    gilly33gilly33 Posts: 245member
    They love to hate Apple. You bet if Apple had exploding phones like Samsung does you bet it would be 'the end of the world' for these people. They just can win. 
  • Reply 17 of 18
    blitz1blitz1 Posts: 412member
    The gap in specs is simply too wide not to go for the extra 120 USD.
    7 Plus is definitely the best (value) iPhone.

    However, I just got a 200 USD Android.
    Suddenly, the 700 USD is too wide to compensate for the little extra specs that iOS (been on it for 9yrs) has over android.

    Economics 101: Marginal value :)
  • Reply 18 of 18

    I got my Jet Black 256GB 7 Plus over the weekend and I am just thrilled! The phone is spectacular.

    I also got to look at the Matte Black version and it really looks nice as well. The powder coated look suits the phone. It isn't as cool as the Black iPhone 5, but is still very appealing.

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