Piper Jaffray: What’s next for Apple

Apple has tripled its order of 3D sensing components for the fall of 2018.

From a note to clients by Piper Jaffray analyst Michael Olson that landed in my inbox Thursday:

Beyond the March & June quarters, we anticipate a wider array devices similar to iPhone X will launch in Fall-18. While we have no direct knowledge of Apple’s iPhone plans for next year, 3D sensing component suppliers are being told to generate volume for the Fall-18 launch that is 3x what was made for iPhone X this year. We expect a lower priced OLED option (likely the current iPhone X with a price cut) and we wouldn’t be surprised to see a “plus” OLED model in ’18, which tests the upper bounds of what buyers are willing to pay for an iPhone and provides an option for those looking for more real estate in their iPhone screen. This would result in three OLED models – iPhone X, iPhone Xs and iPhone Xs Plus. As options for the “X” generation iPhone expand, the “shots on goal” for upgrading increases.

Reiterates Overweight rating and $200 price target.

My take: Olson flirts with a $212 price target, which is where his model takes him if iPhone ASPs increase. He ought to just go there.

4 Comments

  1. Fred Stein said:
    If true, 3X increase must include more than iPhone. A rumor for events almost a year off invites speculation. FaceID on the iPod Pro and the MacBook Pro makes sense, and more likely to arrive in mid 2018.

    3
    November 30, 2017
    • Gregg Thurman said:
      3D sensors on current iPhone X, 2018 iPhone X and 2018 iPhone X Plus, available for full quarter could easily generate 3X YoY growth.

      The big year, IMO, will be FY2019 when Apple will be offering a full slate of current OLED iPhones, which will include a 4.8″ model in the iPhone SE chassis. At that time Apple will be offering 3 current models and 2 discounted models PLUS feature enhancements exploiting camera and other AI/VR capabilities only dreamed about today.

      One iPad equals ~4 iPhone displays (on average).

      Putting OLED on iPads would be nice, but will require much greater supply than is projected by Samsung, LG, Japan Display and China’s BOE can produce.

      I use OLED as the limiting factor to iPad adoption of Face ID because without edge to edge OLED the iPad will require a chin at the bottom for the 3D sensors (at least that is the extent that my forward looking brain can imagine).

      1
      November 30, 2017
  2. Gregg Thurman said:
    “My take: Olson flirts with a $212 price target, which is where his model takes him if iPhone ASPs increase. He ought to just go there.”

    Just as Luca Maestri (and every other CFO) does, WS gives itself a cushion against being wrong when issuing price targets. My experience is that WS gives itself ~3% cushion.

    I don’t give my price targets cushion, I invest with a cushion against my price targets.

    Right now my April price target is $211 ($9.80 ttm X 21.60 ISM). That target matches historic (5 of 7 year trading average extended to April) trend projections and my calculations based on fundamentals.

    I should point out that, on average (5 of 7 prior years), AAPL goes up 6.94% from October earnings to January earnings, and another 13.71% from January earnings to April earnings. In terms of AAPL appreciation the January to April period is the best performing period of the year.

    2
    November 30, 2017

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