“We suspect this signals solid demand driven by more aggressive promotional activity around Black Friday compared to 2020.”
From a note to Goldman Sachs clients that landed on my desktop Wednesday:
In our weekly update of lead time data for Apple we note steady lead times for China and the US and a dip of ~7days across UK and Europe. We have also included lead times from US telco carrier websites for iPhones to capture impacts from US carrier Black Friday deals.
In the US we see some disparity between our normal panel and carrier specific lead times with carriers having longer lead times. We suspect this signals solid demand driven by more aggressive promotional activity around Black Friday compared to 2020. Globally we see iPhone lead times continuing to shorten which we believe signals supply and demand coming closer to equilibrium.
MacBook lead times are unchanged in China and the US vs. last week but increased by 5 days across Europe and in the UK. Given the uniformity of the UK/Europe increases for Mac we believe supply is more likely to be the driver.
Overall, we see a picture here of shorter lead times for iPhone Pro models than last year and supply rapidly catching up to demand. We also see some evidence that the US is tracking well to this point in the quarter with more attractive US carrier promotions the likely driver.
Maintains Neutral rating and $142 price target.
My take: Unpacking the methodology behind that soggy price target…
Our 12-month price target of $142 is based on 27x our Q5-Q8 EPS forecast. Upside risks include better than expected iPhone demand, services growth, and significantly outsized buybacks. Downside risks include weakening iPhone demand, pressure on gross margins, as well as large and dilutive acquisitions.