New survey suggests an 2020 upgrade cycle that’s closer to the iPhone 6 Plus’ than to the iPhone X’s.
From a note to clients by analyst Michael Olson that landed on my desktop Thursday:
CONCLUSION: We expect Apple will ship 5G iPhones in 2H’20. While early to be talking about devices that will not hit the market for over a year, the 5G iPhone’s integration into the investor narrative around AAPL shares has already begun. Our second survey of >1,000 U.S. iPhone owners shows 23% are interested in purchasing a 5G iPhone, up from 18% in our Jun-19 survey.
We see this as a high level of interest given limited 5G marketing/chatter to date and the high price point suggested in our survey. Looking at the remainder of FY19, we expect limited excitement around this year’s iPhones (to be announced on 9/10), however, as long as services and non-iPhone devices continue to perform well, this should tide investors over until anticipation for 5G iPhones intensifies.
5G iPhone Should Drive Upgrades in FY21 & ’22. The last “major” iPhone cycle was iPhone 6 Plus, which drove 52% y/y iPhone revenue growth in FY15; even the Nov-17 release of iPhone X drove 17% growth in FY18. The launch of 5G iPhones (enabling materially faster data transfer) should drive upgrades, especially as the 5G infrastructure improves and apps leveraging 5G permeate the App store. We are conservatively modeling 2% y/y iPhone revenue growth in FY21 (essentially in-line with consensus).
Maintains Overweight rating and $243 price target.
My take: Piper Jaffray actually counts heads and runs surveys. You’d be surprised how few firms do that.