“Pacific Crest’s Andy Hargreaves this morning reiterates a Sector Weight rating on shares of Apple after concluding that sales of the iPhone appear ‘stable’ and that the stock’s downside is ‘limited,'” Tiernan Ray reports for Barron’s. “In fact, It looks as if the ‘next cycle,’ the presumed arrival of an iPhone ‘6S’ sometime this fall, will turn out better than he thought.”
Although it is early and we lack visibility into the critical December quarter, our initial estimates of iPhone component orders in FQ4 suggest Apple is anticipating demand in the next iPhone cycle that is ahead of our current expectations. A meaningful decline in F2016 iPhone unit sales has been our largest concern, so the slightly higher-than-expected initial order volume reduces risk to the shares, in our view.Andy Hargreaves, Pacific Crest senior research analyst
Ray reports, “And orders for current model, in June, appear to be tracking above what he’d thought: ‘iPhone demand appears to have remained solid in recent months, which, along with checks at suppliers, suggests the potential for Apple to sell 50 million to 52 million iPhones in FQ3 versus our estimate of 46.8 million. This could add as much as $0.20 to our FQ3 EPS estimate of $1.86, which is already $0.10 ahead of the Street estimate of $1.76.'”
Read more in the full article here.
MacDailyNews Take: With some 75-85% of the iPhone userbase on pre-iPhone 6 devices, the headroom is certainly significant. And this is even without counting the influx of those who’ve previously settled for cheap Android phones graduating to real iPhones.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]