Analyst Samik Chatterjee has turned “incrementally positive.”
From a note to clients that landed on my desktop Monday:
We are now turning incrementally positive on the volume outlook for iPhone shipments in 2020, led by channel checks from our global supply chain and smartphone analysts, which suggest that Apple is likely to pull an additional lever in the form of a refresh of the legacy iPhone SE/iPhone 8 model to address a much more “value” category than it has been used to with its recent launches.
Importantly, the incrementally positive volume outlook for 2020 is likely to drive upgrades to consensus earnings expectations, in turn driving positive sentiment for the shares and marking a significant change from downward revisions to near-term earnings over the last few months from continued concerns around the impact of the US-China trade war/slowdown in China.
Our positive volume outlook for 2020 is driven by our current expectation for the launch of four iPhone models (1 in 1H20 and 3 in 2H20) and more significant spec upgrades. We are increasing our 2020 iPhone shipment outlook to 195 mn units ─ likely the high-end of the street estimates and materially better than buy-side expectations, which are primed for modest declines from the current run-rate of ~180 mn units. Our FY20 and FY21 EPS estimates rise to $13.00 and $15.30, respectively (vs. $12.85 and $15.10 prior).
Maintains Overweight rating and raises price target to $239 from $233.
Cue the price target history:
My take: That 12 month break in coverage—after Rod Hall left for Goldman Sachs and before Chatterjee took over—did wonders for J.P.Morgan’s attitude.