Wedbush: Asia checks bullish for iPhone 12 builds

Plus, iPhone 13 builds look 25% better than the iPhone 12’s did at this time last year, says analyst Daniel Ives.

From a note to clients that landed on my desktop Sunday:

Over the last few days our Wedbush TMT Team has conducted our iPhone Asia supply chain checks post the Chinese New Year. Coming off an historic December quarter for Cupertino which the company crushed iPhone expectations, the Street has been anticipating some modest cuts to iPhone forecasts for FY21 and reflected in the stock’s sell-off over the last month. To this point, our checks overall came in bullish yet again with only some tweaks to near-term builds and an initial build forecast for iPhone 13 which could be a “game changer” indicating the supercycle party in Cupertino is going well in FY22.

Asia iPhone 12 builds: For the March quarter we believe builds for total iPhones ticked down slightly over the last few weeks and are now in the 56 million to 62 million range vs. our prior checks in the 60 million to 70 million range. For the June quarter we believe initial builds have stayed basically unchanged and remain in the mid 40 million range. We have not seen a robust launch uptrend such as this in a number of years for Apple and the only iPhone trajectory similar would be the iPhone 6 in 2014 based on our analysis…

Initial Asia supply chain builds for iPhone 13 are currently in the ~100 million unit range compared to our initial iPhone 12 reads at 80 million units (pre-COVID) and represents a 25% increase YoY out of the gates. While this number will clearly move around over the coming months, we believe this speaks to an increased confidence with Cook & Co. that this 5G driven product cycle will extend well into 2022 and should also benefit from a post vaccine consumer “reopening environment”. From a spec perspective, we have increased confidence that iPhone 13 will have a 1 terabyte storage option which is double from the highest Pro storage capacity today (512GB) and will also include a number of enhancements with Lidar across all iPhone 13 models.

Maintains Outperform rating and Street-high $175 target (bull case: $225).

My take: Ives’ are the first estimates I’ve seen for the unannounced iPhone 13.

7 Comments

  1. Robert Paul Leitao said:
    Daniel’s “super cycle thesis” remains intact. The average age of an iPhone in use on a global basis is finally trending lower as 5G connectivity capabilities and conspicuous new features prompt upgrades. This induces greater services adoption so average revenue per user (ARPU) is likely to tick higher. The initial iPhone 13 build reports are encouraging for long-term shareholders. The y/y comparisons will get more challenging for Apple as the company laps the pandemic period. Sustained demand for iPhones would be a positive catalyst for the share price as the global economy enters the immediate post-pandemic period. Digital connectivity is an essentiality as the “new normal” becomes reality and is quickly manifested the world over. In other words, Apple has the right products at the right time.

    3
    February 28, 2021
  2. Michael Goldfeder said:
    It will be interesting to watch how many Macs and iPads have been integrated into the traditional business workplaces as a result of the pandemic. Toss in the substantial hacks into both business and governmental data bases, and growth of these foregoing products will be an additional boost to Apple revenues that were not expected to rise much at all over the next few years.

    Windows based work stations are facing competition that was not on the radar screen in the past. Adding to these particular revenue sources creates more growth for ancillary services and perhaps even wearables.

    4
    February 28, 2021
    • David Emery said:
      Macs were making (surprising) inroads before the pandemic. Too many people (probably VPs) were demanding Macs instead of their corporate issued Windows laptops. Once IT lost their fear of Macs, the reduced support costs and increased reliability convinced CIOs this was in their interests to support. Happy users were just a side effect 🙁

      2
      February 28, 2021
  3. bas flik said:
    i see aapl now as a black hole. sucking in all andoid and windows users if they come to near.

    4
    February 28, 2021
  4. Dan Scropos said:
    “Initial Asia supply chain builds for iPhone 13 are currently in the ~100 million unit range compared to our initial iPhone 12 reads at 80 million units (pre-COVID) and represents a 25% increase YoY out of the gates.”

    The quote above, if it comes to fruition, puts this year’s quarterly holiday revenue at $125 billion+. Staggering.

    1
    February 28, 2021
  5. Gregg Thurman said:
    My March quarter estimates are: Revenue $77:750 Billion, EPS $1.02, both higher then estimize.com’s and WS’s consensus. My December quarter estimates were up there as well (just not high enough), even so I ranked 30/502 estimates

    I believe my current estimates to be conservative. Waiting for more data to justify raising them.

    2
    February 28, 2021
    • Dan Scropos said:
      When you’re talking about adding ~$.40 to YoY earnings in ONE quarter, you really see how undervalued Apple is. I hope they retire 180-200 million shares this quarter. This could be the last chance below $150 to do so.

      1
      February 28, 2021

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