From a note to clients by Morgan Stanley Apple analyst Katy Huberty that landed in my inbox Sunday:
Increasing evidence OLED iPhone launches in October, rather than September. In light of the most meaningful feature and technology upgrades in iPhone’s history – including OLED displays, wireless charging, and 3D sensors for AR – we believe it’s reasonable to assume the new, higher priced OLED iPhone ships in October rather than September. This is consistent with supplier checks by the Morgan Stanley Greater China Technology Hardware team, led by Sharon Shih, as published in the July Monthly Databook. Our view of demand over the course of the next iPhone cycle is unchanged with the 6M lower September shipments now incorporated in our FY18 iPhone forecast of 266M (up from 260M) which aligns with our recent bottom-up analysis of upgrades, retention rate, and switchers by region.
Look through September guidance to even stronger FY18 growth. We expect Apple to report an in-line June quarter and provide a weaker than consensus September outlook on the back of a slightly later iPhone launch than typical (October shipment launch instead of September). The delay drives our FY18 estimates higher and creates a dynamic of much better than normal December and March quarter seasonality, providing an attractive set-up for the stock as we move past the September guide. While our September quarter Revenue and EPS is 12% and 20% below consensus, our revised FY18 estimates are 13% and 11% above consensus.
Maintain Overweight and raise price target to $182 from $177.
Note: Huberty came in 11th out of 27 in last quarter’s Earnings Smackdown. See Best and worst Apple analysts, Q2 2017 edition