Apple’s iPhone 11 launch: What the analysts are saying

So far, nothing but tailwinds across the board.

Excerpts from the notes I’ve seen. More as they come in.

Michael Olson, Piper Jaffray: iPhone User Survey Suggests Higher Demand for Lower Priced Models. Apple released this year’s slate of iPhones on Friday (9/20) and our survey of U.S. iPhone owners points to higher demand for lower priced devices this year. The survey results are consistent with our expectations, as we expect FY20 will prove to be a “transition” year for iPhone ahead of 5G devices coming late next year. In other words, we believe users upgrading their iPhone in the coming 12 months are less likely to buy a higher-end model with the promise of 5G devices on the horizon. As a result, we model iPhone revenue down -1% y/y, which is also in-line with consensus. For the remainder of FY19 and into FY20, we expect limited excitement around the iPhones shipped last week, however, as long as services revenue and non-iPhone devices continue to perform well, this should tide investors over until anticipation for 5G iPhones intensifies. Overweight. $243..

Daniel Ives, Wedbush: iPhone 11 Launch Day Strong Out of the Gates; Defying the Skeptics. We have spent most of the day at Apple’s Flagship NYC store where Cook was earlier this morning to kick off launch day for the trifecta of iPhone 11s hitting the shelves around the world. Demand looks strong out of the gates for Apple as the lines at its flagship NYC store were up ~70% today compared to what we saw last year based on our analysis. Given our conversations with customers in line today we believe there is strong demand for the base iPhone 11 version, as well as the 256GB iPhone 11 Pro in both the Space Grey and Gold colors. To this point, lines were unwavering into the afternoon which is a positive data point for Cupertino as last year we witnessed the crowds start to quickly dissipate after the morning rush. Outperform. $248.

Matthew Cabral, Credit Suisse: Pro / Max solid out of the gate, iPhone 11 better y/y but mixed by geo. Apple’s new iPhones began shipping today and through this morning wait times for the iPhone 11 Pro / Pro Max are extended by ~1-2 weeks y/y nearly across the board while lower-priced iPhone 11 wait times remain mixed by geography. Other key observations include: (1) Wait times are longer for the iPhone Pro / Pro Max than the iPhone 11 in most markets, similar to last year and fitting with the pattern of higher-end users more likely to buy early in the launch cycle; (2) 83% of iPhone Pro / Pro Max SKUs tracked have lead times beyond 3 weeks (all regions ex-China/Canada at 2-3 weeks); during last year’s launch cycle we never saw lead times extend past 2-3 weeks for any SKU ex-Canada; (3) iPhone 11 demand remains mixed by geography, with >1 week longer lead times y/y in the US and China, while Europe/Japan/Hong Kong remain more generally available; and (4) In China, lead times for all SKUs are up >1 week y/y, a solid early indicator for demand in what had been the primary source of volatility last year. Neutral. $209. 

Gene Munster, Loup Ventures: iPhone Launch Day Line Survey: Cycle Off to a Solid Start. The line at the 5th Ave store in New York was 89% longer than it was in 2018 for the iPhone XS and XR launches combined. We also surveyed five Apple Stores in the Minneapolis metro area, where the lines were, on average, 20% longer than last year’s combined launches. 82% of respondents were buying an iPhone 11 Pro or Pro Max. While the line waiters are generally Apple fanatics that tend to opt for the higher-optioned devices, we were expecting 70% to opt for the Pro models. This is a sign that the new camera system and battery appear to be enough of an upgrade to keep loyal Apple fans engaged.

Katy Huberty, Morgan Stanley: Latest iPhone Data Points. We believe that the trajectory of iPhone demand is improving in the September quarter and see more upside than downside risk to our September quarter iPhone shipment estimate of 43M (-8% Y/Y). Below we present [one of] three August 2019 data points, as well as recent iPhone 11 pre-order data as evidence to support this view. Overweight. $247.

10 Comments

  1. Robert Paul Leitao said:

    My observations from upgrading two iPhones to the latest models yesterday are that the lines were long, supply was more than adequate and customers were moved through the queue quite quickly. I see it as a strong start for the iPhone 11 series. It’s encouraging analysts observed the same conditions at other locations.

    3
    September 21, 2019
    • Dan Scropos said:

      RPL, with the perceived early success of the iPhone 11 series launch, do you see the potential for eps for fiscal 2020 to exceed $14?

      0
      September 21, 2019
      • Robert Paul Leitao said:

        Dan:

        Good question. Please remember the initial release of the iPhone 11 series handsets is occurring in FY2019. There may be some “pull forward” into the fiscal year that ends on Saturday, September 28th. The first 10 days of sales and the channel fill that is occurring now will occur in FY2019. The timing of the release of next year’s handsets may have a bigger impact on FY2020’s eps results than the early success of the iPhone 11 series handsets.

        What I believe is important to Apple’s top line and bottom line numbers as we head into FY2020 is the level of Services attachment as well as the success of the Apple Watch Series 5. The performance of the Mac and iPad lines will also play a role.

        On average, there’s greater Services attachment with owners of new iPhone handsets. I believe this is among the reasons Apple is being a bit more aggressive on price and trade-in options for this year’s handsets.

        In terms of eps for FY2020, the pace of share repurchases will also be a big factor.

        2
        September 21, 2019
  2. Jerry W Doyle said:

    When one scours the business news and finds articles, analysts comments and views some long lines relative to the introduction of the iPhone 11 series and also reads where the iPhone Pro is selling extremely good, then it is logical to assume the demand is as being perceived. No apology here for exhibiting jubilation! I believe we have reasonable anticipation that the coming Holiday period is going to be extremely good for Apple investors, for Apple employees and for especially, Apple consumers.

    Additionally, the U.S. trade regulators Friday (yesterday) approved 10 out of 15 request tariff exemptions filed by Apple amid a broader reprieve on levies on computer parts, according to a public docket published by the U.S. Trade Representative and found in a Federal Register notice. The move by U.S. officials could make it easier for both Apple and small makers of gaming computers to assemble devices in the United States by lowering the costs of importing parts.

    Apple got these exemptions! Cook made the request directly to the president during a personal visit. The requests were for components such as partially completed circuit boards.

    I stated on this blog previously that Tim C understands Trump. While all other executives on the American Workforce Policy Advisory Board walked away in disgust, Tim C remained sitting and being engaged on the president’s Business Advisory Council working with the president and Executives staffs; and, it is paying off for Apple and its shareholders. Trump never forgets these meaningful personal acts and knows who stayed, and knows who left.

    In summary, Tim Cook has “skin-in-this-game” with Trump. Cook always remains to engage and dialogue with this president. This is one of the highest compliments this president relishes.

    0
    September 21, 2019
    • Bruce Oran said:

      I agree. Tim Cook has been able to engage Trump on behalf of Apple without compromising his own beliefs. Cook understands that doing so is part of his job as CEO and for the sake of hid company and shareholders keeps the ear of the person most able to influence the continued success of Apple.

      3
      September 21, 2019
  3. Fred Stein said:

    Re Tim and Trump: Tim does not have to negotiate. The case is: “You do not want to be the grinch that stole Christmas.”

    Re this launch: It may be so hot that analysts will scurry to revise their FY 19 and current quarter estimates. And that’s just 10 days of sales.

    0
    September 21, 2019

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