From a note to clients by Rosenblatt’s Jun Zhang that landed in my inbox Friday:
We See a Stronger December Quarter and Believe March Quarter Risk Is Overblown
We expect Apple to report December quarter results that are stronger than current Street expectations as our research points to higher than expected iPhone X production last month.
Although we believe Apple may guide below the street for the March quarter (we estimate a range of $61-63 billion, below current consensus of $68 billion) as iPhone sales have slowed, we are not as bearish as some since it’s our view that the company should recognize a portion of the iPhone X units that were produced in December and iPhone SE2 shipments (we anticipate 5-6 million shipments) which could begin as early as March. We also believe there could be upside from the HomePod (available Feb. 9) and continued strong demand for AirPods. We are currently modeling 55 million and 41 million iPhone shipments for the March and June quarters, respectively.
Maintains Buy rating and $180 price target.
My take: The Street doesn’t know which way to turn on Apple this week.
Katy Huberty’s March numbers are contributing to this, and I hope this either gets corrected before earnings or she comes up with a much better explanation for her tall guidance estimate.
Something is very wrong here.
People looking at data rarely go back as far as I have. They forget the massive Q2 of 2012 and the substantial Q2 of 2015. Assuming something like the 2015 Q2 would definitely but 65 M in the ball-park. But a 2012 Q2? If that happens, then an 85 M Q2 is possible.
If we go back and look at those two years, we see that the 2015 Q2 represented the advent of the iPhone+ model, and that coincided with massive December holiday demand followed by massive Chinese New Year demand. And that’s definitely in the realm of possibility.
Looking at 2012 Q2, that’s the year Apple moved it’s iPhone release date 3 months closer to the holidays and came out with the 4S. That meant Apple was prepared to deliver a second year model from a mature supply setup. Even so, the demand completely overwhelmed supply until well into Q2.
Is that possible again? It’s certainly possible for the X. But beyond that, total iPhone count is about ALL the models – and this year Apple vastly increased the models that were available. So for everything but the X, if people wanted it, they got it. And so for me, it means that yes, it’s possible that Q2 2018 will match Q2 2012.
But in any case, we’ll find out in less than 5 working days (next Thursday). Right now, the market seems to be “betting” that the number will be closer to 65 M than 85 M. Personally, I think 65 M would be very good indeed, especially compared to the last two years. But this is not an Apple-friendly market, if it ever was. They’d rather bet on continued momentum for stocks like AMZN and NFLX….