Cowen bullish on Apple's Q4 results, sees iPhone ASP growing to $606

Posted:
in AAPL Investors
Analysts are starting to chime in on what they are expecting to see in Apple's forthcoming earnings report, with the latest prediction increasing both revenue and earnings per share significantly over earlier estimates.




According to investment firm Cowen and Company, Apple's average phone selling price for its fourth quarter of the fiscal year will climb to $606 solely based on the strength of less than three weeks of iPhone 7 family sales. As a result, analyst Timothy Arcuri expects to see earnings per share come in at $1.69, versus $1.42 in the last quarter.

Arcuri believes that revenue will hit $47.8 billion, a bit higher than the aggregate Wall Street estimate, and in the middle of Apple's guidance for the quarter.

While Apple doesn't detail every category of sales or generally break them down by model, the latest estimates assume 46 million iPhones sold on the quarter, with 21 million of them from the iPhone 7 family. Watch sales are estimated to be at 3.5 million units, and iPad sales are assumed to be 9.5 million.

Arcuri sees an increased mix of the larger iPhone 7 Plus versus the smaller iPhone 7, versus previous large to small screen model comparisons. This year, the 7 Plus is said to be between 35 and 40 percent of the new phones sold, including the iPhone SE.

On both the strength of the quarter and the reception to the iPhone 7 family by the public, Cowen and Company is also increasing what it expects in earnings per share for the next quarter from $3.17 per share to $3.22 per share and a consequent increase in revenue to $75 billion.

Earlier in October, Apple moved its earnings call for the fourth quarter of 2016 up two days to Tuesday, Oct. 25, at the time citing an unannounced scheduling conflict.

The schedule conflict has turned out to be an Oct. 27 "hello again" release event, where the company is expected to refresh at least some of its Mac product line.

Comments

  • Reply 1 of 3
    brucemcbrucemc Posts: 1,499member
    Only those that don't "really" follow or understand Apple's market (seems to be the vast majority...) are surprised at the iPhone 7 uptake and the expected resumption of iPhone unit sales growth this year.
    - Apple is continuing to grow the iPhone installed base.  Some estimates are growth of potentially 100M users over the last 12-18 months (Ben Bajarin, Above Avalon, etc).  That is a bigger base to upgrade from than last year, or two years ago.
    - Upgrade cycles are lengthening, but that is by a matter of months on average, say going from 26 months average to 28 or 30.  The cycles are not moving to PC (or tablet) territory anytime soon.
    - iPhone 6 was a super cycle, in that it pulled in upgraders out of the usual pattern to get the larger screen. That base is getting primed for an upgrade.
    - Over a year's cycle (not in the 1st few weeks of new model), large majority of upgraders are from 2 or more models ago.  So the calculation of "is this a worthwhile upgrade" for vast majority is if the cumulative features/improvements from iPhone 6 are worth it.  Very objectively this case can be made (I and others have gone into this detail before).
    - iPhone SE helps with those preferring the smaller screen, and the lower price point brings in new users.  Hopefully that unit gets some spec bumps in the spring.

    It is not going to be big growth, but Apple's FY 2017 will show growth above 2016 and 2015, in terms of the iPhone.
    h2pjony0watto_cobra
  • Reply 2 of 3
    MacProMacPro Posts: 17,875member
    brucemc said:
    Only those that don't "really" follow or understand Apple's market (seems to be the vast majority...) are surprised at the iPhone 7 uptake and the expected resumption of iPhone unit sales growth this year.
    - Apple is continuing to grow the iPhone installed base.  Some estimates are growth of potentially 100M users over the last 12-18 months (Ben Bajarin, Above Avalon, etc).  That is a bigger base to upgrade from than last year, or two years ago.
    - Upgrade cycles are lengthening, but that is by a matter of months on average, say going from 26 months average to 28 or 30.  The cycles are not moving to PC (or tablet) territory anytime soon.
    - iPhone 6 was a super cycle, in that it pulled in upgraders out of the usual pattern to get the larger screen. That base is getting primed for an upgrade.
    - Over a year's cycle (not in the 1st few weeks of new model), large majority of upgraders are from 2 or more models ago.  So the calculation of "is this a worthwhile upgrade" for vast majority is if the cumulative features/improvements from iPhone 6 are worth it.  Very objectively this case can be made (I and others have gone into this detail before).
    - iPhone SE helps with those preferring the smaller screen, and the lower price point brings in new users.  Hopefully that unit gets some spec bumps in the spring.

    It is not going to be big growth, but Apple's FY 2017 will show growth above 2016 and 2015, in terms of the iPhone.
    I suspect many of those still with iPhone 5 and 5s phones also will make the jump to 7 as well as current 6 series users.
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