From a note to clients that landed on my desktop Thursday:
Based on gauging pre-order activity across the globe to its predecessor iPhone 12 we believe iPhone 13 pre-orders are currently running north of 20% ahead of Apple’s launch last year, an impressive start for this latest upgrade cycle out of Cupertino.
China has been leading the way with preorders that could approach the 5 million/6 million mark based on data coming out of China e-commerce sites including JD.com.
We continue to believe the models skew towards iPhone 13 Pro and Pro Max which is important around driving ASPs higher and overall top-line growth for Cupertino over the coming quarters. We also believe attractive carrier trade-ins and discounts from the likes of AT&T and Verizon are pulling in significant demand as many fence sitting Apple customers now look to trade in their iPhones (including many that have not upgraded in 3 years+) for the new iPhone 13.
Apple remains in the midst of its strongest overall product cycle in roughly a decade. Our Asia supply chain checks for 2H heading continue to put iPhone builds between 130M-150M. Asia supply chain builds for iPhone 13 are currently still in the ~90 million unit range compared to our initial iPhone 12 reads at 80 million units (pre-COVID) and represents a ~10% + increase YoY out of the gates.
In a nutshell on the iPhone front, we believe the robust consumer product cycle continues globally for Cook & Co. especially with today roughly 250 million of the current 975 million iPhones not upgrading their smartphones in over 3.5 years based on our analysis, speaking to massive pent up demand within Apple’s installed base.
Apple remains a top tech name to own. We remain very bullish on tech stocks into the rest of the year with our favorite large cap tech name to play the 5G transformational cycle is Apple, with the 1-2 punch of its massive services business and iPhone product cycle translating into a $3 trillion market cap for Cupertino in the next 6 to 12 months in our opinion.
Maintains Outperform rating and $185 price target.
My take: For subscribers who joined Ives’ ask-me-anything Zoom call last Thursday, most of this is old news. Missed the Zoom? Click here.