Nomura ups Apple to ‘Buy’ on strong iPhone growth, increasing Android switchers

“Apple shares are down $1.10, or 0.9%, at $121.27, despite getting a new bit of positive coverage from the Street this morning, from Nomura Equity Research’s Jeffrey Kvaal, who took over coverage from Stuart Jeffrey, who had had a Neutral rating on the stock,” Tiernan Ray reports for Barron’s. “”

“Kvaal boosts the firm rating up to Buy, with a $145 price target, writing that ‘We expect Apple to extend its share gains in 2016’ and ‘the strong iPhone 6 cycle still leaves plenty of scope for growth both with the 6S cycle and in China,'” Ray reports. “Kvaal describes the company as ‘bestriding the consumer electronics industry like a colossus’ and notes that it should be able to avoid the fate of prior colossi such as Nokia, writing ‘We do not consider Apple vulnerable to such a rapid reversal of fortune given its ecosystem of devices, software, and services.'”

MacDailyNews Take: Especially since Apple was responsible for it. 🙂

Ray reports, “Kvaal thinks the Street expectations are much too low for the next model of the iPhone, presumably an ‘iPhone 6S.’ He’s modeling units of iPhone moving up from 230 million this fiscal year to 250 million next year, versus Street expectations for things to be roughly flat.”

Apple has managed to hold share as the market moved away from its sweet spot in the high end of the smartphone market —an impressive feat indeed. Apple held ~20% share of the global smartphone market in 1Q15, down modestly from 1Q12. We believe Apple has been able to do this in part by converting Android users over to the iOS ecosystem and in part by expanding its distribution. According to a recent survey conducted by CRR, the research arm of CLSA, more Chinese consumers are switching from Android to iPhone. The survey showed that 53% of the respondents that own an iPhone have switched from Android; and, perhaps more important, 32% of Android users who plan to buy a new phone within the next 12 months intend to switch to iPhone. This supports our view that Apple has been faring well in China and the switch rate from Android is at historical highs. Aside from China, iPhone is gaining traction in Europe and the U.S. as well. Switch rates from Android were 18% and 12% in Europe and US, respectively, in 4Q14; these numbers increased to 33% and 14% in 1Q15, respectively. — Nomura Equity Research analyst Jeffrey Kvaal

Read more in the full article here.

MacDailyNews Take: If it’s not an iPhone, it’s not an iPhone.

SEE ALSO:
Samsung will never overcome Apple’s advantage in mobile device profitability – July 30, 2015
Apple iPhone shipments show impressive growth as Samsung falls – July 30, 2015
Samsung offers downbeat outlook for year ahead of new Apple iPhones – July 30, 2015
Apple’s indomitable iPhone 6/Plus sales unfazed by Samsung’s anemic Galaxy S6/Edge – June 2, 2015
iPhone 6, killer: Beleaguered Samsung’s Galaxy S6 sales are a total disaster – May 22, 2015
Beleaguered Samsung reports 30 percent decline in operating profit – April 28, 2015
Samsung Galaxy S6 phones suffer weaker than expected sales in South Korea homeland – April 22, 2015
15 percent of Samsung Electronics execs quit amid profit slump – April 2, 2015
Significant Android to iPhone switching weakens market for Samsung Galaxy S6 – March 24, 2015
Apple iPhone takes smartphone market share from Android around the world – March 4, 2015
Poor man’s iPhone: Android on the decline – February 26, 2015

[Thanks to MacDailyNews Reader “David E.” for the heads up.]

16 Comments

  1. For those of us who own lots of AAPL and reinvest the dividend let’s hope they hold off moving up until 2 wks from now after August 13! Always nice to be able to afford more shares.

  2. “Kvaal thinks the Street expectations are much too low for the next model of the iPhone, presumably an ‘iPhone 6S.’ He’s modeling units of iPhone moving up from 230 million this fiscal year to 250 million next year, versus Street expectations for things to be roughly flat.”

    Of course he is, if his anal sphincter prediction fails, what’s he got to lose? He bought low (as most other “anal sphincter ANALYSTS” did) and will cash in within the next few months like all the others will and make a ton of money. HOWEVER those of us 70 plus year old farts are getting screwed day in and day out. Where in the hell is the SEC when these BIMBOs rape us shareholders?? Oh, yeah, NO balls in the current administration to cure what ails us – not just in reference to Wall Street but anything else controlled by the Feds. Ya know what, I’m glad I’m going on 73 in September because that means I might not have all that much more time to piss and moan about the assholes that are running our government. What really bothers me is that my Grandkids (all between 2 & 10 years of age – with a bunch of AAPL shares I donated to them) have the rest of their lives to face the consequences. Think about that folks (including you “Millennials” who know it all) that have young family members to think about. Guess what – YOU DON’T KNOW SHITE!! Get your heads out of your butts and wake up to the REAL world!!

  3. No matter how many products Apple sells it’s almost guaranteed they’re going to miss Wall Street’s expectations. Any guidance Apple gives, Wall Street is going to immediately tack on a couple of million more units for good measure and Apple will meet its own guidance but miss Wall Street’s expectations. There’s nothing Apple can do about that. Wall Street is rigging the numbers against Apple shareholders but anything is allowed to take place. Apple has to beat every sales number or else the stock will quickly sell off. I’m learning to live with that but Apple should keep raising the dividend a healthy amount every year if they can’t boost the share price. Apple seems to be the only profitable company that can’t move their own share price and it’s just ridiculous. A few years back Apple loyalists were claiming how Apple would eventually reach fair value, but it’s only gotten worse. Apple is far below its peers in value.

    1. I agree with lots of what you’re saying and up voted you

      but I need to add that in my thinking some of the problem of low P.E (thus share price) is due to Apple.

      Apple’s P.R and promotion of Apple is really poor. People can flame me but I see Tim Cook only get REALLY PASSIONATE when he talks about social concerns (note he says he only has pictures of M.Luther K and Robert Kennedy on his wall for inspiration, both social activists and not business leaders ) and is practically cold fish or awkward when he promotes Apple (like when he talks about the Watch) .

      He seems almost embarrassed sometimes in touting Apple while Jobs seemed to vibrate with intensity answering anything about Apple or it’s products.

      Likewise Bezos of Amazon is said to be a five star promoter , you read reporters blogs saying how wonderful to meet him at parties etc. Bezos is able to sell a new ‘conveyor belt system to ship parcels’ as the greatest wonder like the pyramids and T.C pushes the Watch like a cabbage. Jobs did personal marketing since he was young man going to tech fairs to promote Apple 1 computers etc, Bezos also was always promoting, had trucks painted with amazon signs drive around before Amazon was big. They’re both natural and committed marketeers, TC is not. Bezos’ PR ability is one reason Amazon’s P.E is sky high (in spite of the company posting near zero profits).

      T.c doesn’t believe in promotion : Evidence? Samsung outspends apple 10 bucks to one in marketing, Google outspends Apple similarly in Political Lobbying (10 bucks to 1 ), Apple hasn’t run a Mac campaign since Mac/PC guy more than half a decade ago ( in spite of Mac being a bright spot in earnings) ETC.

      Has there been a memorable ad campaign equal to 1984, think Different, Mac/PC guy, dancing iPod silhouettes since TC took over ? Nope.

      TC needs to get going on serious PR for APPLE and its PRODUCTS vs getting publicity for SOCIAL CONCERNS (good as those things are) because Apple is first and foremost a CONSUMER GOODS COMPANY with SHAREHOLDERS.

      1. A supplier for the Apple Watch just stated that sales of Apple Watch are below even modest expectations. Tim stated the June sales were better than May. Well how could they not be? There was no supply in April and May. Talk about spin. So I think Tim does as most CEOs do, tries to put a positive spin on everything his company does. After all, that’s why he’s paid millions and millions every year. But even Tim can’t undo low production from a supplier. That is a fact. That’s a no spin zone.

        1. I’m saying TC doesn’t spin anything well.

          I was in Advertising and PR.

          TC didn’t really ‘spin’ the Watch sales at all , in fact I think it was the reverse as I’m sure what he said about Watch sales better in June was TRUE as it was statement made in the financial announcement and under SEC rules (fudge data is a serious offence in financial declarations — the SEC can demand to see actual numbers privately ).

          What I’m saying TC doesn’t know how to ‘spin’ the slower than expected start well, he tried to explain but it comes off as ‘cold’. Jobs and Bezos would have said something like ‘they were astonished by the ‘stunning’ debut of the Watch and it was ‘only constrained by limited points of sale and production issues’ etc and wrap it all it up in a glowing ‘halo’. TC sort of states the facts and doesn’t know how to ‘sell’ something. It’s hard to explain, it’s like good car salesman and bad, both are using the same facts they were given about the car, but one can spin and project the vehicle as the most wonderful advance in automobile history and the best deal since the USA bought the South from France , the other can’t. Sometimes it’s not even the words but the tone of voice and the enthusiasm.

          I think the Watch sales are better than the naysayers say and if this happened : “”A supplier for the Apple Watch just stated that sales of Apple Watch are below even modest expectations. ” TC should get PR to jump on it and correct the view.

          1. just read this in Forbes,

            Forbes was talking about Jim Dalrymple’s problems with ITunes and how he was invited to Apple . J.D writes ” They are certainly aware of what’s been going on, I can assure you.”

            so Forbes take was ” If Apple is “certainly aware” then why can that not be communicated?”

            see another PR issue.

            The whole Apple Watch launch too although can be explainable by production issue was also handled poorly, there was no PR or Marketing staff to explain and to smooth over irate customers customers confused about the April 24 advertised but no- launch. Not to mention the bizarre Free Bono into your device promo (which supposedly cost tens of millions).
            I can go on but I think I’ve beaten it enough.

            I like TC in many other ways, he’s the best to run Apple. smart, good manager, staff like him etc but he’s unfortunately no a born marketeer. Schiller chief of Marketing is also a great guy but also trained in the sciences and not marketing.

            Apple sells so much due to great products and WORD of MOUTH by Apple fanatics like myself but not much by great advertising anymore.

  4. I came to buying Apple stock late. The wife and I find we really like Apple products. We have iPhones, iPads, iMacs, MacBooks, Apple TVs. So we decided we should invest in AAPL. So we called our broker and sold a lot of our other stock to buy AAPL. We bought 6,600 shares at $132.45. It went up a bit. But now it is at $121.30. $11.15 a share. Down for a drop of $73,590. Today even Cramer is down on AAPL. We are in our late 70’s and have other adequate income. We use the stock market as a way to build our inheritance for the kids. What would you folks do if you were in our position? Losing an average of $8,000 a day is worrying.

    1. You bought in too high and bought too many shares at one time. It should run up nicely between now and Christmas. I would sell sometime during that time. You’ll be able to buy back in cheaper after Christmas. And I would only put 25% of that money back in AAPL. Diversify.

  5. I said this well over a year ago: Android is like the training wheels of smart devices. After people get their feet wet they will realize the importance of the smartphone and will upgrade to something more reliable such as the iPhone. According to the research sited this is occurring in many parts of the world, especially in China and Europe.

    It took five years for smartphones to reach one billion subscriptions, which occurred in 2012. In 2014 the number doubled to over two billion. In 2020 the forecast calls for a whopping six billion smartphone subscriptions.

    The majority of the smartphones sold around the world from 2012 through today are Android smartphones. A lot of these users do not upgrade their smartphones every year or every other year like they do in North America and other regions. This means it’s probably safe to assume that those 2012 through 2013 smartphones will be upgraded in the 4th quarter of 2015 through 2016. If 32 percent of these eligible Android users in Europe, China, etc. are going to upgrade to an iPhone over the next twelve months then this is a big deal and means that there will be many additional iPhone sales going forward. As Tim said in the call, this is early innings.

    http://www.ericsson.com/res/docs/2015/ericsson-mobility-report-june-2015.pdf

Add Your Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.