iPhone XS and iPhone XR are a recipe for success for Apple stock
The day after Apple unveiled three new, pricey iPhones and a new Apple Watch, the move even further towards the premium segment was a focus of several analyst reports, with them all saying that Apple's earnings will hit new heights both from increased sales volume, and a higher average selling price per device.
Analysts weighed on late Wednesday and early Thursday on Apple's reveal of three new iPhones, the iPhone XS, XS Max, and XR, with the iPhone XS family positioned in price similarly to the iPhone X from a year ago.
"Once again, Apple has shown their mastery of pricing tiers," Gene Munster of Loup Ventures wrote. "Factoring in nine new phones with price points above the FY18 ASP ($745) makes it highly likely that ASPs will trend up."
Munster also noted that thanks to improving hardware and WatchKit, Apple Watch is "building an insurmountable lead in the wearables space."
Morgan Stanley's Katy L. Huberty announced a $2 price target increase to $247, its second increaes of its Apple price target in two weeks.
"Today's product event largely met our expectations heading into the event," said Huberty. "While this iPhone launch was marketed as an "S" cycle, iPhone ASPs and larger storage SKUs across the portfolio surprised to the upside, as did the inclusion of dual-SIM capabilities."
Other analysts spoke in more detail about the other features of the new iPhone lineup.
"The company is attempting to create more iPhone options, while moving its whole portfolio further up into the premium segment," wrote Wayne Lam, Jusy Hong, Gerrit Schneemann of IHS Markit. "Apple has completed its hardware design refresh that started with iPhone X, and moves to an all-notch display line-up. Features like high-refresh-rate and high-dynamic-range (HDR) OLED displays, computational photography and enhanced audio recording, and improved performance for artificial reality (AR) games and other offerings, re-enforce Apple's focus on the user experience Apple is now further moving its devices beyond the reach of its competitors, at least in terms of the ability to charge premium prices."
Guggenheim Partners' Robert Cihra wrote that Guggenheim is raising its Apple price target to $245, from $235, following the announcement.
"A is for Apple; A is also for ASP, we think investors have been too focused on flattening iPhone units and not enough on its potential to grow through ASPs (e.g., able to raise prices without losing market share, illustrating the power of its high-end demographic and peel-off-the-top model)," Cihra wrote. "Indeed, we reiterate our math that with Apple's iPhone ASP having increased in 6 of the 10 years since introduction (contrary to typical hardware deflation), those price increases have effectively been a bigger driver of Apple's revenue "upside" than its units over that period."
While noting that most of what Apple announced Wednesday had leaked in advance and was therefore unsurprising, Macquarie Research's Ben Schachter proclaimed Macquarie "incrementally more positive given AAPL's likely ability to raise iPhone ASPs," and therefore raised their price target from $214 to $235. Schachter also noted that the new AppleCare pricing announced Wednesday had a chance to positively impact revenue in Apple's Services sector.
Jun Zhang of Rosenblatt Securities, while surprised at the lack of a new iPad Pro, set a $200 price target. "Overall, we are positive on Apple, as we believe the company will continue to generate strong iPhone shipments, strong service revenues, and increase margins." While stating that the new iPhone XS "may not offer enough of a product upgrade from the iPhone X to drive sales," Rosenblatt predicted that the other two models "will perform well in the market."
On Wednesday in Cupertino, Apple officially announced three new iPhones, the iPhone XS, XS Max, and XR, as well as the redesigned Apple Watch Series 4.
Analysts weighed on late Wednesday and early Thursday on Apple's reveal of three new iPhones, the iPhone XS, XS Max, and XR, with the iPhone XS family positioned in price similarly to the iPhone X from a year ago.
"Once again, Apple has shown their mastery of pricing tiers," Gene Munster of Loup Ventures wrote. "Factoring in nine new phones with price points above the FY18 ASP ($745) makes it highly likely that ASPs will trend up."
Munster also noted that thanks to improving hardware and WatchKit, Apple Watch is "building an insurmountable lead in the wearables space."
Morgan Stanley's Katy L. Huberty announced a $2 price target increase to $247, its second increaes of its Apple price target in two weeks.
"Today's product event largely met our expectations heading into the event," said Huberty. "While this iPhone launch was marketed as an "S" cycle, iPhone ASPs and larger storage SKUs across the portfolio surprised to the upside, as did the inclusion of dual-SIM capabilities."
Other analysts spoke in more detail about the other features of the new iPhone lineup.
"The company is attempting to create more iPhone options, while moving its whole portfolio further up into the premium segment," wrote Wayne Lam, Jusy Hong, Gerrit Schneemann of IHS Markit. "Apple has completed its hardware design refresh that started with iPhone X, and moves to an all-notch display line-up. Features like high-refresh-rate and high-dynamic-range (HDR) OLED displays, computational photography and enhanced audio recording, and improved performance for artificial reality (AR) games and other offerings, re-enforce Apple's focus on the user experience Apple is now further moving its devices beyond the reach of its competitors, at least in terms of the ability to charge premium prices."
Guggenheim Partners' Robert Cihra wrote that Guggenheim is raising its Apple price target to $245, from $235, following the announcement.
"A is for Apple; A is also for ASP, we think investors have been too focused on flattening iPhone units and not enough on its potential to grow through ASPs (e.g., able to raise prices without losing market share, illustrating the power of its high-end demographic and peel-off-the-top model)," Cihra wrote. "Indeed, we reiterate our math that with Apple's iPhone ASP having increased in 6 of the 10 years since introduction (contrary to typical hardware deflation), those price increases have effectively been a bigger driver of Apple's revenue "upside" than its units over that period."
While noting that most of what Apple announced Wednesday had leaked in advance and was therefore unsurprising, Macquarie Research's Ben Schachter proclaimed Macquarie "incrementally more positive given AAPL's likely ability to raise iPhone ASPs," and therefore raised their price target from $214 to $235. Schachter also noted that the new AppleCare pricing announced Wednesday had a chance to positively impact revenue in Apple's Services sector.
Jun Zhang of Rosenblatt Securities, while surprised at the lack of a new iPad Pro, set a $200 price target. "Overall, we are positive on Apple, as we believe the company will continue to generate strong iPhone shipments, strong service revenues, and increase margins." While stating that the new iPhone XS "may not offer enough of a product upgrade from the iPhone X to drive sales," Rosenblatt predicted that the other two models "will perform well in the market."
On Wednesday in Cupertino, Apple officially announced three new iPhones, the iPhone XS, XS Max, and XR, as well as the redesigned Apple Watch Series 4.
Comments
A comment I saw on the New York Times describes these phones well- do not call the phone the iPhone X S, call it the iPhone "excess".
From the Google:
It is not so much a phone as it is a portable Playstation combined with a camera with fake Bokeh.
What I don't get is how these same people don't seem to have an issue with other premium market products like automobiles, watches, stereo systems, speakers, headphones. I can't afford a set of speakers that cost $15K each but apparently others can. Nor can I afford a $10K HDTV but hey, whatever.
Sure Apple got more exposure, but IMHO it wasn't worth it because there are a lot of customers who buy Apple products and expect them to last forever BECAUSE of their price.
Btw just because some people can only afford an older iPhone, it does not make it the same kind of purchase of an older generation android.
The only bad move IMHO was killing the SE. There is still a market for that phone with customers who like that size of iphone.
I think some folks will still go to the most expensive one event when there budget tells them to go for the Xr
I am starting to love the watch too.
still waiting for them to add some blood test metrics then its a go for me.
Apple has better information than everyone else on the quantities they sell and the margins they make. As sad as it is to see that form factor sunset, Apple surely is making a rational decision.
Apple satisfied its expanding (and increasingly captive) base yesterday. It also flashed many attractions to gain Android users of various ages.
1. The Watch—with its ECG, Afib, and Fall Detection—suddenly becomes a gateway product, a near necessity for many elderly, and tempting to non-geek guys older than 45. The new design may still say “strapped computer,” but certain combos starting to look more chic than geek.
2. The Apps. Can Samsung or Huawei or any other phones run the HomeCourt app, demoed by NBA Hall of Famer Steve Nash? Or that crazy multiplayer AR, or other games, and shopping AR apps alluded to? Not for awhile. In this Apple has unique, maybe more "must-have," attractions for teens and twenties.
3. The iPhones. The increase in screen sizes great for services, not to mention China market. The camera boost and post-processing looks significant. The introduction of Xr will immensely enlarge the AR users, and Pay users, etc. All this and more foretells a swelling ecosystem.
Is $1500 too much to pay for a personal supercomputer that fits in your pocket? Let’s see anyone out there best Apple at 2X that price while making enough money to keep their company afloat and pay their staff decent salaries.
Good thing you don't repeat the "rich people are stupid" cliche that runs on iKnockoff fans' lips.