Piper Jaffray upgrade survey: 50-50 split iPhone XS and XS Max

That should raise some eyebrows, given Ming-Chi Kuo’s much-cited report that demand for the Max is 3 to 4 times the XS.

From a note to clients by Michael Olson that landed on my desktop Monday:

We asked >700 domestic iPhone owners which iPhone they would buy if they were to upgrade this year. 39% pointed to iPhone Xs or Xs Max, with approximately a 50/50 split between the two models. Our previous model assumed only 35% of units from Xs or Xs Max (with a 50/50 split). The remaining 61% indicated they would upgrade to either the iPhone Xr, 7 or 8. Considering Apple has not yet started marketing for iPhone Xr we expect interest for that device to grow in the coming weeks (Xr is available to order on 10/19 and ships on 10/26). Our model currently assumes 30% of FY19 iPhone units are iPhone Xr. If, however, we assume a similar mix from newly released devices in FY19 vs. what we estimated in FY18 (75% from the new models in FY18 – iPhone X and iPhone 8 & 8 Plus), it implies iPhone Xr would be 36% of units, driving our ASP assumption even higher.

Raising iPhone ASP Assumptions for FY19. We are now expecting an FY19 ASP of $770 (vs. previous estimate of $758). If, as described above, iPhone Xr proves to have a higher mix than our estimate (i.e. 36% instead of 30% — to allow for new iPhones to account for 75% of mix, similar to FY18), it would take our FY19 iPhone ASP to $780 (vs. current consensus of $768).

Maintaining Overweight rating and $250 price target.

My take: It makes sense that upgraders would be less interested than early adopters in the top-of-the-line iPhone. A 50-50 split, if it holds up, would be a surprise.

UPDATE: I seem to have buried the lede. This from MarketWatch:

Apple stock gains after Piper turns more upbeat on iPhone average selling prices.

Apple Inc. shares are up 1.4% in Monday morning trading and are nearing their 52-week high of $229.67. Piper Jaffray analyst Michael Olson upped his estimates on Monday,..


  1. Gregg Thurman said:
    For all their surveys and calculations WS analyst never seem to get it right with revisions after revisions being made to previous “expert” prognostications that proved inaccurate.

    Paraphrasing a late 1940’s radio show, “Only the Shadow (Apple) knows” and it isn’t talking until October 30. The Holy Grail is management’s Guidance. All others be damned.

    In the meantime, AAPL continues to track the Historic Trend Chart as it nears the upper range limit. Standard Deviation now stands at 5.43 from the 7 year mean vs last quarter’s 2.41.

    October 1, 2018
  2. Kathy Corby said:
    Perhaps the disparity between Piper Jaffrey and Ming-Chi Kuo has to do with the fact that Piper Jaffrey surveyed domestic buyers, while Ming-Chi Kuo is clearly referring to all buyers, or at least most especially Asian buyers, per your quote in the previous article

    October 2, 2018

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