The Next iPhone: Good Things Come to Those Who Wait – Barron’s
Investors are increasingly caught up in the possibility that the next iPhone — the 10th Anniversary edition — could miss its usual September upgrade schedule. Since peaking at $156 in May, Apple shares have slipped 4% as investors grapple with rumors about a delay.
On Monday, Morgan Stanley analyst Katy Huberty adjusted her quarterly iPhone sales projections to reflect an October release date for the next iPhone. She’s basing the data off the iPhone 4s release in 2011, the only other time an iPhone was released in October. Huberty projects six million fewer units will be sold in Apple’s fiscal 2017 fourth quarter — which ends Sept. 30 — and instead shifts them to fiscal 2018 for 266 million iPhone shipments that year.
This means stronger sales over the holiday shopping season and greater year over year growth each quarter for the rest of the fiscal year. Essentially, delaying the iPhone launch to October moves even more pent-up demand for iPhone upgrades to next year, making 2018 look even better in comparison. Apple’s customers will wait an extra month if they have to.
Huberty also noted that after the last two iPhone “supercycles” — major form factor and feature changes rather than incremental upgrades — Apple shares outperformed the market for many quarters. The next iPhone should fit that supercycle definition. The device is rumored to have a slew of new features including an OLED display, 3D augmented reality sensors, and wireless charging.
Huberty believes that at Apple’s current value the market has not priced-in that history of accelerated growth. Additionally, possible tax reform allowing Apple to repatriate its quarter-trillion dollars of cash held overseas might produce more share buybacks or other measures to boost its stock in fiscal 2018. As a result, Huberty raised her price target on Apple shares from $177 to $182, 21% above the stock’s recent price.
Big Picture: An analyst believes that a delayed iPhone launch isn’t such bad news as it simply shifts sales into the future.
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July 17, 2017 at 10:38PM