Evercore: ‘Survey says… iPhone Mix going higher, ASPs To Shift Higher’

From a note to clients by Amit Daryanani that landed on my desktop Thursday:

All You Need to Know: We maintain our positive stance on AAPL post our survey of ~5,000 individuals regarding their iPhone purchasing intentions. Key Points:

    1. Demand for newer models is strong with 78% of respondents interested in buying one of the four new models (vs. 68% last year). The percentage of respondents interested in the Pro/Pro Max models has increased modestly vs last year’s survey which should provide a further mix benefit.
    2. Strong demand for new models is driving an ASP uplift with our survey pointing to an ASP of $838 vs. $806 last year.
    3. Battery life and 5G capabilities were tied for the most popular reason to upgrade, which seems to validate Apple’s large 5G marketing push.
    4. Average memory per device is pegged at 207GB vs. last year was 168GB, we are seeing stable memory loading at this point.
    5. Average App Store spend is up to $8.62 vs. $6.84, supporting our thesis that higher ARPU should become a key driver of Services growth going forward.
    6. Wearables continue to increase in popularity with major increase in % of consumers interested in Apple Watch and AirPods (could see a sizable uptick here given no earbud being shipped).

Net/net: Survey results point to solid iPhone mix, increasing App Store revenue per user, and growth in wearables demand. This supports our thesis calling for a strong iPhone cycle in the near-term and sustained long-term strength across the wearables and services business lines.

Maintains Outperform rating and $135 price target.

Cue Figures 1 and 2:

Click to enlarge. 

My take: Six good reasons to be bullish.

One Comment

  1. Robert Paul Leitao said:
    Based on Mr. Daryanani’s analysis of the survey results, consumers are purchasing, on average, more memory in their new iPhones and App Store revenue per user, on average, is also rising. This is all very good news for Apple.

    Apple has chosen to moderate iPhone prices. In response, it appears early adopters have chosen to spend more on storage capacity thus increasing the ASP (average selling price) over prior year levels. Consequently, early adopters are spending more per unit.

    I suspect we will see a change in the model mix and storage capacity choices as we move a few months out from initial release. The question is whether or not moderated iPhone prices will spur increased unit sales in late/winter early spring and whether the upward trend of rising App Store revenue activity per user will also continue following “release season” activity. This is when adoption of Apple One may make a material difference in ARPU (average revenue per user) moving forward.

    November 6, 2020

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