From a note to clients by BMO analyst Tim Long that landed in my inbox overnight:
New models driving higher ASP. We believe Apple, which already commands
the highest selling prices in the industry, will introduce a higher-priced model (or potentially two) in September alongside the standard iterative refresh to iPhone 7…
- Entry – iPhone SE, priced $399-$499
- Last-Gen – iPhone 7/7 Plus, priced $549-$769
- Current-Gen – iPhone 7S/7S Plus, priced $649-$969
- Premium – iPhone 7 Pro (aka iPhone 8), priced $969-$1,069
Biggest refresh cycle since iPhone 6. We expect some cannibalization of both regular and large-screen models but still model 11 million of net incremental unit growth in the first 12 months, which would make the upcoming cycle the most successful refresh cycle since iPhone 6 was launched in 2014.
Valuation remains attractive. As the largest publicly traded company, Apple is continuing the decade-long trend of the biggest player trading at a discount to the market. However, AAPL shares have been particularly discounted lately, and we base our price target on a reversion to the 10-year mean.
Reiterate Outperform, raise price target to $160 from $142.