From a note to clients by RBC analyst Amit Daryanani that landed in my inbox early Wednesday:
We are modestly reducing our iPhone unit expectations for March-qtr and beyond to reflect our expectation that AAPL may work to curtail its iPhone channel inventory aggressively ahead of the fall 2018 product launches, especially as we think AAPL will launch all its devices this September (vs. doing a staggered launch).
Furthermore, we think units have been more stable on the LCD models vs. OLED, which could dampen the ASPs as well.
As a result, for March/June-qtr we are modestly reducing both iPhone units and ASPs; for FY19 we are increasing our iPhone unit expectations but lowering our ASPs to reflect incremental demand from the LCD models.
Net/Net: We are sticking with our OP rating as we see several levers that AAPL can use to convert low single digit unit/sales growth to mid-teens EPS growth – 1) Gross margin upside from cost downs, NAND tailwinds & yield efficiencies, 2) Services growth that should contribute to sales and ~50-60bps to GMs, 3) Capital allocation that could enable ~500-600bps of share reduction annually over the next 5+ years.
Maintains Outperform rating, lowers price target to $203 from $205.
My take: I’ve never see as many buy-one-get-one-free offers on a top-of-the-line Apple product as I’ve seen lately for the iPhone X.