“Samik Chatterjee from J.P.Morgan has very slightly cut the target price for Apple stock to $266 from $270 because of the overall economic climate, and the so-far “tepid” response to the iPhone XR,” Mike Wuerthele reports for AppleInsider. “In a note seen by AppleInsider Chatterjee is interpreting reports from the supply chain and retail differently than other analysts. Instead of Apple’s price-points on the iPhone line being a weakness, the analyst considers it to be a strength. Citing a ‘strong ASP of $793 vs. consensus of $751,’ Chaterjee contends that Apple is successful in ‘driving consumers to its top-of-the-line phones with limited challenges’ with the pricing model, and wide range of iPhones at prices as low as $450.”
“However, the strong American dollar is posing a problem in emerging markets. With the dollar’s continuing strength, this has the effect of driving up effective prices in the developing markets, which have unique fiscal challenges of their own,” Wuerthele reports. “Services continue to be a strong point for Apple globally, though, which is seen as a potential off-set to any drop in iPhone sales.”
“The trim in Apple stock price is very small, from $270 to $266, with strength in the stock from the ‘under-appreciated by investors’ Services revenue,” Wuerthele reports. “The price change appears to be just a small refinement, and maybe a temporary one at that. Chatterjee specifically notes that the iPhone XS and iPhone XS Max had better-than-expected demand from consumers alongside the slower than anticipated iPhone XR launch. ”
Read more, and see the charts, in the full article here.
MacDailyNews Take: Can we go below $190, pretty please? Our truck will back up even faster down there!
Note to analysts: You cannot cover Apple if you do not understand that iPhone users are not going elsewhere. They will either hang onto their old iPhones (most of which are older Home button-saddled devices) or they will choose another iPhone model. If XR demand is soft, then demand for the other, higher-priced X-class iPhones is likely better than expected.
As per iPhone ASP, we clearly agree with Chaterjee:
If there actually is an issue with iPhone XR sales — and the jury is still way out on that one — that could be a good thing for Apple as it could mean that when spending over $750 on an iPhone, more people than ever say to themselves, “Well, I might as well get the very best one available,” and buy the iPhone Xs Max over iPhone XR. This would positively impact Apple’s iPhone ASP, of course. — MacDailyNews, November 9, 2018
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