From a note to clients by analyst Timothy Arcuri that landed on my desktop Thursday:
Off low expectations, results/guide should be fine. iPhone mix remains challenging, but FX headwinds also start to abate in June. The big unknown remains China and 3rd party gov’t data did not show much iPhone improvement post-Chinese New Year, though the worse does seem to be behind us.
Our installed base analysis is still consistent w/AAPL commentary that first-hand phone replacement rates are still ~3yrs; ergo, iPhone units of ~180MM in C19 are very close to replacement barring a big extension this Fall if consumers really decide to wait for 5G and maybe foldable in 2020.
Ultimately, our view here remains unchanged; iPhone expectations for this Fall are already very low, investors may be under-estimating the degree/timing to which new services could contribute revenue and comps should get easier, and the stock remains the biggest global under-weight among active managers. We are raising our price target again… on a multiple that is now in-line with 10-year average relative to the market.
Maintains Buy rating and raises price target to $235 from $215.
My take: Not the first this week, and probably not the last.