UBS: Plans to buy iPhones hits 5-year high, retention rate hits 7-year high

"The market does not reflect the stickiness of the Apple ecosystem." -- Analyst David Vogt

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

Smartphone survey data more positive for sustainable iPhone demand. UBS Evidence Lab recently surveyed over 7,000 smartphone users in the U.S., U.K., China, Germany, and Japan to gauge smartphone demand. The three key takeaways from the survey pertaining to Apple are

    1. iPhone 12-month purchase intent increased to 22%, the highest level in 5 years,
    2. iPhone retention rate reached 86%, the highest level in seven years, and
    3. Interest in 5G modestly improved, consistent with Apple's view of "the early days of 5G...with a lot of 5G upgrades will be in front of us".

Relative to the prior survey, the data is incrementally more positive for both iPhone and smartphone demand generically while we believe the market does not reflect the stickiness of the Apple ecosystem.

Maintains Buy rating and $155 price target. 

My take: UBS' price target is comprised of $141 billion for Apple's core business and $14 billion for the "probability value of Apple's auto opportunity." Vogt is the only analyst I know of who is breaking out the (unannounced) Apple Car business like this.

CORRECTION: An earlier version of this item was missing a couple of B for billions.

Below: USB chart shows purchase intent rising in every market but China, where it is flat.

apple ubs 155

9 Comments

  1. Miguel Ancira said:
    Does not get any clearer than that.

    Seems the market never prices in the important facts.

    3
    May 21, 2021
  2. David Emery said:
    It would be interesting to plot that against sales in each region for the following quarter (i.e. did they act on that intent in the same proportions.) Not sure there’s credible data for that, though.

    1
    May 21, 2021
  3. Jerry Doyle said:
    “…. iPhone retention rate reached 86%, the highest level in seven years, …”.

    I wish David Vogt would have given some clue as to how long iPhone users are holding on to their devices. We were told by one of our guests several weeks back that retention of iPhones in users hands were longer than Macs. That revelation surprised me, but I can believe it since the devices’ premium build quality and Apple’s seven year security software updates do extend device usage lifetime.

    2
    May 21, 2021
  4. Kirk DeBernardi said:
    (quote)

    “…the market does not reflect the stickiness of the Apple ecosystem.”

    CORRECTION: The market has not ever reflected the stickiness of the Apple ecosystem.

    3
    May 21, 2021
  5. Daniel Epstein said:
    Editing Thought. I think Philip talking about the price target should not be using Billions but dollars of the stock price. 141 stock price for Main business. 14 dollars for potential car opportunity. One can debate the values. I have expressed similar thoughts about the car opportunity priced in the stock. If the car or automotive product becomes reality then the 14 number may be very small.

    2
    May 21, 2021

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