From a note to clients by Guggenheim Apple analyst Robert Cihra that landed in my inbox Monday night:
We believe Apple has some valid long-term issues that ultimately matter for the stock (e.g., size, elongating smartphone replacement cycles, China, Services) but do NOT think any short-lived delay launching its new high-end iPhone 8 SKU qualifies as one of them.
Rather, we believe its UNIQUE iOS means loyal users will WAIT, so any units pushed out of CY17 would just be pushed into CY18. Given the stock trades on forward numbers, that could even end up a boost, similar to how we see limited supply of OLED screens turning this iPhone into a 2-3 year upgrade cycle; helping push macro hurdles out to 2019-20E.
Apple reports Jun-qtr earnings on Aug 1 and we remain 3c ahead of consensus. We cut our Sep-qtr/FY17E EPS by 18c for a further delayed launch of iPhone 8 but just push that into FY18E, which pushes our EPS to >$11, now 50c ahead of consensus.
Reiterate Buy and $180 price target.
Note: Katy Huberty made pretty much the same point over the weekend. See Morgan Stanley lowers Sept. iPhones, raises Apple target
Cihra adds this cool chart:
Click to enlarge.
As detailed back in our 5/16/17 note A is for Apple; A is also for ASP we see the biggest upside driver of Apple’s economics over the past 10yrs having been iPhone ASP – e.g., we calculate that having increased an average 2%/year instead of declining at a deflationary pace like the 7%/year PCs did during their growth phase, that gap is now worth 60% of Apple’s entire iPhone revenue in FY17E.