From a note to clients by Morgan Stanley analyst Katy Huberty that landed in my inbox Thursday night:
What investors are asking: What will it take for Apple stock to continue to work as we approach the end of the March quarter and supply chain data points become noisier heading into the product transition?
Our view: We continue to expect Apple to unveil a groundbreaking new iPhone in September and believe that discussion of supply chain delays is premature considering component production typically starts around April and manufacturing ramps around July, and therefore it’s almost impossible to know yields at this point…
Early indications continue to point to 20-30% iPhone unit growth in C2H17, which is far better than our 4% estimate that incorporates the risk of supply constraints, low yields and/or a delayed product launch.
Additionally, recent news reports noted that Chinese smartphone vendors Oppo and Vivo told suppliers to halt production due to rising inventory levels, which suggests to us that potential smartphone buyers may be delaying their purchases in anticipation of a new revolutionary iPhone. In fact, more Vivo and Oppo smartphone users plan to buy an iPhone than stick with their current brand. Combine this with limited OLED supply that will largely be soaked up by Samsung and Apple, and we continue to see a strong 2H17 and beyond for Apple, especially in China, as the 10th anniversary phone is released.