A slow start in OLED iPhone production sends ripples through the bank’s Apple model, but its June quarter estimates and 12-month price target are unchanged.
From a note to clients by JP Morgan analyst Rod Hall that landed in my inbox Wednesday:
With this quarterly preview we are reducing our iPhone Pro volume expectation to reflect data points we have been picking up since late May related to a slower production start for the flagship OLED phone. These data points have long been known by the market, in our opinion, so we believe these model changes are already largely reflected by Apple’s stock and the supply chain. Importantly, we do not believe that Apple’s production schedule is still changing materially with most current delay reports simply dated reverberations of decisions Apple made back in the spring.
Changes in Hall’s September quarter estimates:
- OLED iPhones shipped: From 9 million to roughly 2 million ( down nearly 80%)
- Total iPhones shipments: 49.5 million to 42.2 million (down 15%)
- Revenue: From $54.4 billion to $46.9 billion (down 13%)
- EPS: From $2.04 to $1.78 (down 13%)
Partially offset by changes in his fiscal 2018 estimates:
- Total iPhone shipments: To 270.2 million from 262.9 million (up 3%)
- iPhone average selling price: To $759 from $717 (up 6%)
Maintain Overweight and $165 price target.
Note: Hall’s estimates tend to be conservative. In my Earnings Smackdown last quarter, he came in 22nd out of 27 analysts. See Best and worst Apple analysts, Q2 2017 edition