Excerpts from the notes I’ve seen, more as they come in.
Katy Huberty, Morgan Stanley: Can Improved iPhone 13 Affordability Drive Demand? Today’s iPhone launch event was in-line with our expectations both from a feature set and pricing perspective, although Apple still managed to sneak in a few surprises, such as a new 1TB iPhone model and new iPads. In our view, the most incremental takeaway is that despite relatively unchanged like-for-like iPhone pricing compared to the iPhone 12, the introduction of higher end iPhone storage SKUs is likely to drive Y/Y iPhone ASP growth. At the same time, higher iPhone trade-in values and more aggressive carrier promotions make iPhone 13 more affordable for consumers. When combined with iPhone replacement cycles that remain elongated, 5% 5G adoption within the iPhone installed base, fully reopened retail stores, and elevated iPhone backlog entering FY22, we remain bullish on the prospects for iPhone growth in FY22, with the potential for upside vs. our current iPhone ASP forecast (-1% Y/Y). Overweight. $168.
Martin Yang, Oppenheimer: New iPhones Remain Compelling Drivers for Upgrades. While the iPhone 13 family offers mostly incremental improvement from last year, their combination of new features, upgraded storage, and same price points will likely attract upgraders (users on iPhone X or older models). Also, we believe, given strong inflationary pressure on smartphone supply chain this year, that iPhone 13 will offer better relative value over Android flagships, sustaining its appeal for switchers. Lastly, we believe Apple’s dominance in tablet and smartwatch, remains unchallenged following the latest refreshes. Outperform. $165.
Kyle McNealy, Jefferies: Check Out Those Carrier Promotions. One of the most important elements of the iPhone 13 launch from our perspective is the carrier promotions (and effective subsidies) that are coming through even bigger than the strong promotions last year. At launch, all three major carriers in the US are advertising promotions for a free iPhone 13 ($800) for qualifying customers subject to certain terms. AT&T’s promotion will offer customers an iPhone 13 Pro ($1,000) for free and T-Mobile’s promotion through Apple will even cover the cost of an iPhone 13 Pro Max ($1,290) if you’re trading in a 12 Pro Max. Across the board, we see the promotions as more aggressive than last year – they’re either a higher dollar value or don’t require a net-new line. Buy. $175.
Wamsi Mohan, Merrill Lynch: Impressive technology in new products, but will it help drive upside to the stock? Apple introduced the iPhone 13, Watch Series 7 and iPad/iPad Mini and highlighted the power of its ecosystem with TV+, Fitness+ and the creativity that can be achieved with its tightly integrated software and hardware. However, the bar for F22 growth is high given (1) Product announcements today are incremental and we view consensus expectations of roughly flat iPhone unit and ASPs for F22 as unlikely to materialize vs. our 241mn/210mn for iPhones in F21/F22 despite ongoing carrier incentives, (2) Waning of stimulus benefits will create a mix headwind toward lower priced devices (attractive iPhone 11 at $499), which the newer highest end SKUs are unlikely to offset, (3) The timing of the iPhone launch creates an almost certain sharp deceleration in growth in the March qtr (possibly even in Dec qtr), (4) iPad revs of ~$30bn in F21 are 50% higher than the typical $20bn annual revenues which could be a function of pull-in of demand during COVID and (5) Regulatory issues (EPIC and Google) could create a headwind to the valuation multiple in the near term as investors recalibrate the risk to Services growth trajectory. Neutral. $160.
Angelo Zino, CFRA: Maintains Buy opinion. We believe the biggest takeaways are AAPL’s pricing strategy, which remains unchanged across all product categories, as well as availability of devices on 9/24. All four iPhone devices return with no notable changes to the aesthetics but include internal upgrades (A15 Bionic, longer battery life, higher entry level storage), an enhanced camera system, and new Photographic Styles/Cinematic mode. The iPhone 13 Pro and iPhone 13 Pro Max will carry a new storage capacity of 1TB. Buy. $160.
Harsh Kumar, Piper Sandler: Thoughts on iPhone 13 Announcement. In our eyes, there were no revolutionary announcements, as most of the new hardware items were redesigns and performance improvements from previous generations. However, we believe the announced iPhone trade-in programs (up to $700 for the iPhone 13 and up to $1,000 for the iPhone 13 Pro) will continue the 5G iPhone upgrade momentum. Based on our due diligence, trade-in programs have led to strong demand for the iPhone 12, and we do not see it slowing down this cycle as 5G continues to push the needle forward. Overall, we continue to be impressed with the increased usability and performance of each new generation of Apple products. Overweight. $175.
Amit Daryanani, Evercore: iPhone Upgrade Cycle Ready to Inflect? Watch Steals the show. We think the iPhone upgrades were largely as expected and while not a material upgrade from iPhone 12, we think the incremental features will make this a compelling product for the 900M+ iPhone users that didn’t purchase the iPhone 12 – ensuring the iPhone cycle sustains into CY22… The Watch also received a compelling upgrade with a 20% increase in screen space, which enables typing on a full keyboard and an improved battery that allows for faster charging. Though we would note, AAPL didn’t provide an explicit timing on when the next gen watch will be available. Outperform. $180.
Gene Munster, Loup Ventures: Apple’s Virtuous Cycle of Mutual Benefit. Apple’s annual flagship event was another iteration of providing products with increasing value to consumers at largely consistent prices. This is what we refer to as a virtuous cycle of mutual benefit. A product provides increasing value to the consumer at the same or lower price point, while more value accrues to Apple as it continues to grow its monetizable device base. Companies that participate in this virtuous cycle are most likely to continue to gain market share and expand market cap.
Daniel Ives, Wedbush: Initial Takeaways on the Virtual Launch. The iPhone Pro (starts at $999) was front and center with some major camera advancements (e.g. macro photography) including a new ultra wide camera capabilities and significant pixel upgrades as well as all day battery technology built in. The headline is that Apple is introducing a 1 terabyte option for the iPhone 13 Pro which is a potential game changer. Pre-orders kick off this Friday for the new iPhone 13. Overweight. $185.
Mathew Olson, The Information. Reality Check. The Lidar scanner didn’t even get mentioned during Apple’s (incredibly long) segment hyping the 13 Pro phones as cinema-quality filmmaking tools. It’s almost bizarre how little attention was given to AR in general. However small the avid user base for mobile AR is, I’d wager it’s bigger than the number of people who genuinely need or want cinematography inspired-tricks for their iPhone. Maybe Apple erred on the side of saying nothing for fear of having too little to show right now.