Royal Bank of Canada trims Apple estimates

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.


  1. Gregg Thurman said:

    Prior to FY2013 March revenue declined >39% (on average) from December quarter revenue. Since FY2013 that average decline has dropped to ~33%.

    Ergo, a decline of 33% – 39% off of December results is not extraordinary. To the contrary it should be expected. All these downward unit estimates are nothing more than Capt Obvious acknowledgements of history.

    That Apple increased iPhone ASP by more than $100 at a time when the smartphone market has hit saturation (and all Android competitors are slashing prices to gain unit market share) is extraordinary.

    Will iPhone maintain December’s ASP into the March quarter? I want to know why anybody would be concerned when Apple has never maintained December ASPs beyond December.

    For all their use of industry buzz words I find Wall Street’s analysis severely lacking in depth and historical precedence (IOW crap).

    Just so you know, since adjusting my forecast model to Luca Maestri’s guidance style, my revenue and EPS estimates (posted on under my name) have been consistently better than WS’s consensus.

    The issue isn’t, and shouldn’t be, about units sold. It should be about revenue and net income performance. Apple leads all of its competitors in both.

    March 28, 2018

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