One factor, says analyst Timothy Arcuri, is that the largest mix of iPhones in the installed base (iPhone 7) is three generations old.
From a note to clients that landed on my desktop Monday:
Monthly government data suggests overall iPhone demand in China was strong in the month of September, up ~230% vs. ~110% monthly growth last September. This is wholly consistent with recent procurement data/estimates from the UBS Asia Hardware team.
A stronger sell-through combined with our supply chain work leads us to believe there is upside to our current iPhone unit estimate of flat for the Dec. quarter and flat Y/Y in F20. Apple stock is up ~8% against the S&P 500 down ~1% since the launch of iPhone 11 – an atypical seasonal pattern that we think duly reflects both our optimism about C2020 and AAPL’s prominence as a major global underweight for portfolio managers.
Several factors are contributing to strong iPhone demand including a better trade-in program from Apple, a more attractive price-point for the base model, services bundle with hardware, and given the largest mix of phones in the install base (iPhone 7) is three generations old.
Maintains Buy rating and $235 price target.
My take: Are iPhone supplies short or demand strong? This data point suggests the latter.