From a note to clients by analyst Amit Daryanani that landed on my desktop Wednesday:
All You Need to Know: We are raising our Dec-qtr and beyond estimates to reflect a combination of – a) better iPhone unit trajectory, b) higher ASP as we see mix shifting towards Pro/max and c) better services growth given >30% growth for AppStore.
Importantly not only do we see demand remaining robust in Dec-qtr but also expect upside to sustain in March-qtr as the channel fill sustains especially given extended lead-times for iPhone 12 Pro and to lesser extent Pro Max.
The iPhone Pro has now been shipping for two and a half months and our analysis suggests lead time remains elevated across each country we track, with the exception of the US. The US currently offers the opportunity for same day delivery on the iPhone Pro; however, this is a special courier delivery that costs an additional $10 (first time we have seen this option).
Standard delivery still requires a 21 day wait, a modest improvement from the 33 day wait we recorded at the beginning of December. Outside of the US, China delivery times for the 12 Pro have come down from 23 to 16 days (still the longest lead-times 10-weeks out for any iPhone in history). The iPhone 12/12 Mini has shorter delivery times across all regions, which could point to a strong mix of higher priced iPhone 12 Pros.
Net/net: Delivery time data continues to point to strong demand for the Pro/Pro Max models, which could have a materially positive impact for both mix and margins… Higher target is driven by an higher EPS (increased our iPhone ASP assumption) and a 1.0x increase P/E multiple.
Maintains Outperform rating, raising price target to $145 from $135.
My take: Apple sentiment is shifting.
There’s a reason the top tier of earners are getting richer, while the middle class continues to shrink.
It’s always about sentiment, primarily the sentiment of retail investors who are easily scared out of their positions by misleading and/or outright erroneous headlines.
It used to be that opinions were reported on the back page under the banner OPINIONS. Not anymore, opinions are mixed in with news and reported as fact. WS does nothing to put a stop to factually incorrect media reporting as that reporting presents buying opportunities for them.
The death of today’s financial “news” reporting can’t come soon enough, in my opinion. It won’t happen, of course, because there is just too much money to be made from the status quo.
As Gene Munster said on the Zoom, it’s OK for analysts to incrementally raise their targets. It’s much tougher to revise downward.
Since AAPL has had severe downturns, analysts err on the side of caution. We can assume their real estimates are higher.