Apple: Bernstein sticks with $132 price target, despite rising iPhone ASPs

“We struggle to see a catalyst for the stock.” — Analyst Toni Sacconaghi

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

Phone ASPs increased an estimated $170 YoY (or 24%) to $880+ in FY Q2, the highest level since iPhone launched in 2008. By contrast, estimated iPhone unit sales were modestly below our forecast.

What is driving strength in iPhone ASPs? We believe it is largely a mix shift to Pro/ProMax models; moreover, our analysis suggests that this mix shift was the principal driver (~50%) of Apple’s stunning 575 bps of YoY improvement in product GMs in Q2. We estimate that the mix of Pro/Pro Max models in Q2 may have been 2000 bps higher than a year ago. Moreover, our analysis suggests that margins are 1000 bps+ higher than non-Pro Models, largely due to richer attach rates of storage/NAND, which generates up to 90% incremental gross margin. We believe that average NAND upsell/attach could be $150 higher on Pro/Pro Max models vs. Mini/iPhone 12.

So, what will happen to iPhone ASPs going forward? On one hand, financing/trade-in plans could make iPhones appear more affordable and continue to support strong ASPs over time… on the other hand, ASPs this year are likely benefitting from wallet share shifts amid the pandemic and high upgrade rates among Apple’s most affluent customers in China/Asia looking to move to 5G, both of which may not repeat next year…

While Apple’s multiple has come down considerably since the beginning of the year, the stock still trades at ~23.5x our FY 22 estimates, and Apple will be staring down very difficult comps in essentially every business in FY22 & next year’s iPhone 13 cycle is likely to be evolutionary/ more muted. We struggle to see a catalyst for the stock.

Maintains Market Perform rating and $132 price target.

My take: For Sacconaghi, it’s all about the iPhone.


  1. Gregg Thurman said:
    Fundamentals no longer matter where Apple is concerned.

    May 11, 2021
  2. Fred Stein said:
    Yes, Toni, it is hard to see a catalyst if you only look at iPhone. If you look at everything else, you see many catalysts.

    Even if you only look at iPhone, the long arc is relentless growth. Further, the iPhone produces the ROI to sustain Apple Silicon investments, shared by all other devices. And, the iPhone drives Apple’s best business, the App Store.

    May 11, 2021
  3. Daniel Epstein said:
    Why should his vision of Apple’s business be any better now than it was before? He seems to think Apple is a static company as far as products are concerned and sees no upside in any part of the business. Probably upset that he has to give Apple a 23.5 multiple on FY 22 year earnings.

    May 11, 2021
  4. Lalit Jagtap said:
    Thank you Toni, I am buyer of AAPL today. You help me take action.

    May 11, 2021
  5. David Emery said:
    And we struggle to see a catalyst for rational stock price projections. If ASP goes up, gross margin goes up, why would the stock not go up?

    And we’re staring -at- the comps showing Toni’s previous failures to adequately project Apple’s price.

    May 11, 2021
  6. Dan Scropos said:
    Catalysts, both real and potential:

    -$90 billion in buybacks
    -Glucose monitoring hint
    -Legacy hardware dominance
    -Services growth
    -IB growth/engagement/satisfaction
    -Apple Glasses
    -3 of 4 Apple Watch users were new
    -AirTags revenue

    I see more major catalysts now than ever before.

    May 11, 2021
  7. David Drinkwater said:
    I will duplicate post this today, because I actually feel this strongly about it:

    I hope Apple is backing up the damn pickup truck every day at these prices.

    May 11, 2021
  8. Kirk DeBernardi said:
    “We struggle to see a catalyst for the stock.”

    Kinda says it all, doesn’t it?

    May 12, 2021

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