iPhone headed for record earnings growth for rest of 2018, says analyst

Posted:
in AAPL Investors
Based on the continued strength of iPhone sales, Guggenheim Partners has raised its Apple revenue estimates, with services revenues continuing to surge.

Guggenheim's iPhone chart


Accoridng to a research note written by Guggenheim Partners analyst Robert Cihra, and obtained by AppleInsider, Apple is expected to post another solid quarter, driven by iPhone sales and strong services performance. Guggenheim has raised its Apple revenue estimate for the quarter to $52.9 billion, up from $52.4 billion.

Cihra maintained his forecast of 43 million iPhone units sold, with a 4 percent year-over-year gain. He also expects iPhone average selling price to rise 14 percent year over year.

"Investors have not seemed overly impressed with iPhone X uptake to date," Cihra wrote, "but we think they ought to be much more impressed by Apple's ability to raise ASP double-digits without impacting unit share in an otherwise no-growth smartphone market, illustrating the power of its high-end demographic and peel-off-the-top model."

In addition, following Apple's extremely strong services performance in Q2, Guggenheim predicted that to continue. Cihra sees services revenue rising 28 percent year-over-year to $9.3 billion, with the App Store contributing 38 percent of that revenue, followed by Media Content and Licensing.

Services revenue breakout

The next iPhone

As for the 2018 iPhone cycle, Guggenheim believes that the next generation will arrive in late September, consisting of a 6.5-inch iPhone X Plus and a 6.1-inch LCD-based iPhone, as well as a refresh of the current 5.8-inch model.

The note also speculated that the LCD model may drop the numbering convention and simply be called "iPhone," just as iPad did with its third generation.

The consensus about the next line of iPhones is that Apple will release three of them, with some using OLED screens and others LCD. The new iPhones will likely contain Corning's new Gorilla Glass 6, and a new color pallette has been rumored as well.

No more doom and gloom

Three months ago, prior to Apple's second quarter earnings release, several analysts issued notes that predicted sluggish performance for iPhone sales, and for the company itself. One Morgan Stanley note about soft iPhone X demand in the summer, from an analyst who's normally an Apple bull, was enough to send Apple's stock downward back in April.

These skeptics were proven wrong, however, when Apple reported its strongest March quarter ever. Heading into next week's earnings, it appears analysts have been more cautious, with fewer notes reaching our inbox altogether this time around. One note this month, from Ming-Chi Kuo, focused more on the company's product road map than on financial performance.

Comments

  • Reply 1 of 10
    melgrossmelgross Posts: 31,471member
    from their mouths to our ears, as they say. I hope it’s true.
  • Reply 2 of 10
    As far as I see it, analysts have a 50% chance of guessing on how the iPhone is/will do. How come they are always wrong? Was there any prediction from analysts about how great the Pixel phones are doing?
    baconstangwatto_cobra
  • Reply 3 of 10
    SpamSandwichSpamSandwich Posts: 30,837member
    “..,illustrating the power of its high-end demographic and peel-off-the-top model."

    What the hell is up with this nonsensical analyst slang? “Peel-off-the-top model”? Ridiculous. These bozos are so full of... themselves.
    racerhomie3melodyof1974watto_cobra
  • Reply 4 of 10
    nunzynunzy Posts: 662member
    Everything analysts say is always completely wrong.
    melodyof1974SpamSandwich
  • Reply 5 of 10
    hydrogenhydrogen Posts: 221member
    Here we go again ....


    1) pump up volumes estimates

    2) and ....
    edited July 2018 watto_cobra
  • Reply 6 of 10
    FolioFolio Posts: 499member
    That Morgan Stanley analyst upped her target above $230 a share. As did BAML analyst at 230. Like most things, you gotta sift to find the nuggets useful to you.
    watto_cobra
  • Reply 7 of 10
    tmaytmay Posts: 3,553member
    Based on the continued strength of iPhone sales, Guggenheim Partners has raised its Apple revenue estimates, with services revenues continuing to surge.

    Guggenheim's iPhone chart


    Accoridng to a research note written by Guggenheim Partners analyst Robert Cihra, and obtained by AppleInsider, Apple is expected to post another solid quarter, driven by iPhone sales and strong services performance. Guggenheim has raised its Apple revenue estimate for the quarter to $52.9 billion, up from $52.4 billion.

    Cihra maintained his forecast of 43 million iPhone units sold, with a 4 percent year-over-year gain. He also expects iPhone average selling price to rise 14 percent year over year.

    "Investors have not seemed overly impressed with iPhone X uptake to date," Cihra wrote, "but we think they ought to be much more impressed by Apple's ability to raise ASP double-digits without impacting unit share in an otherwise no-growth smartphone market, illustrating the power of its high-end demographic and peel-off-the-top model."

    In addition, following Apple's extremely strong services performance in Q2, Guggenheim predicted that to continue. Cihra sees services revenue rising 28 percent year-over-year to $9.3 billion, with the App Store contributing 38 percent of that revenue, followed by Media Content and Licensing.

    Services revenue breakout

    The next iPhone

    As for the 2018 iPhone cycle, Guggenheim believes that the next generation will arrive in late September, consisting of a 6.5-inch iPhone X Plus and a 6.1-inch LCD-based iPhone, as well as a refresh of the current 5.8-inch model.

    The note also speculated that the LCD model may drop the numbering convention and simply be called "iPhone," just as iPad did with its third generation.

    The consensus about the next line of iPhones is that Apple will release three of them, with some using OLED screens and others LCD. The new iPhones will likely contain Corning's new Gorilla Glass 6, and a new color pallette has been rumored as well.

    No more doom and gloom

    Three months ago, prior to Apple's second quarter earnings release, several analysts issued notes that predicted sluggish performance for iPhone sales, and for the company itself. One Morgan Stanley note about soft iPhone X demand in the summer, from an analyst who's normally an Apple bull, was enough to send Apple's stock downward back in April.

    These skeptics were proven wrong, however, when Apple reported its strongest March quarter ever. Heading into next week's earnings, it appears analysts have been more cautious, with fewer notes reaching our inbox altogether this time around. One note this month, from Ming-Chi Kuo, focused more on the company's product road map than on financial performance.
    All of the analysts are noting/happy with the growth in services, hence the upgrade. iPhone revenue has likely been factored in previously.
  • Reply 8 of 10
    gatorguygatorguy Posts: 20,278member
    melodyof1974 said:Was there any prediction from analysts about how great the Pixel phones are doing?
    I don't think that has any effect on Apple and iPhone sales, nor does bringing "what about Google" into the discussion. ;)
    melodyof1974
  • Reply 9 of 10
    SpamSandwichSpamSandwich Posts: 30,837member
    hydrogen said:
    Here we go again ....


    1) pump up volumes estimates

    2) and ....
    3) Profit!
  • Reply 10 of 10
    bluefire1bluefire1 Posts: 877member
    Just wait until a bendable iPhone or one with 3D is unveiled.  To the moon!
    watto_cobra
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