Evercore adjusts Apple price target up $5 to $190

"Notable uptick in ASPs driven by mix towards Pro/Max will drive upside in Q3/Q4." -- Analyst Amit Daryanani

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

All You Need to Know: We maintain our positive stance on AAPL post our survey of ~4,000 individuals regarding their iPhone purchasing intentions. Key Points:

1) Go Pro: Demand for high-end models is notably higher vs. prior years. Pro Max demand is at 33% (vs. 14% LY). Aggregate, Pro mix increased from an average of 41% to 56%, reflecting the benefit from Apple’s efforts to concentrate upgrades in the Pro Models.
2) ASPs up 10%: Given skew of mix and new (PLUS) model, ASP’s are likely ~$940 through iPhone 14 cycle (vs. $852 LY).
3) Wearables Scale Higher: Intention to buy (new/upgrade) AirPods & Apple Watch was an all-time high at 71% and 67%.
4) Average memory per device continues to inch higher at 286GB per device (vs. 263GB LY).
5) Services Expands: Apple Pay sees sustained pick-up in momentum (48% vs. 43% LY), same with AppleCare (48% vs. 40% LY).

Overall, we think the survey data along with the lead-time elongation for iPhone 14 Pro and Pro Max delivery (35-40 days) suggest we should see upside vs. street expectations for Sept-qtr and likely Dec-qtr.

Net/net: Notable uptick in ASPs driven by mix towards Pro/Max will drive upside in Q3/Q4. We see modest unit upside vs. street expectations (low single digit) but ASP’s could surprise materially (street at +1% ASP vs. survey work implies 10%+).

Maintains Outperform rating, raising price target to $190 from $185. 

My take: I missed this when it came in Monday. Too much email!

One Comment

  1. Bart Yee said:
    Will love these phrases from Tim and Luca during the Q4 2022 earnings call:

    “Overwhelming demand for iPhone 14 Pro and Pro Max, really surprised us.”

    “We made adjustments to production to better align our supply chain with demand.”

    “Revenue was up because of favorable products mix in iPhones and Wearables.”

    “Achieved all time Q4 revenue despite foreign exchange headwinds”

    “Highest Q4 regional revenues across all regions.”

    “Record level and percentage of Android switchers ever.”

    “We were successful in reducing most supply chain constraints this quarter. That is a real testament to our entire supply chain, our production partners, and all of our Apple employees worldwide.”

    “We see continued strong demand across all product lines and services into Q1 holiday quarter and beyond, but still see foreign exchange headwinds due to the strong dollar and macroeconomic and world events uncertainty.”

    “We believe most constraints on Mac and iPads have lessened so we feel confident we can meet demand for Q1. The positive response we’ve had to our new iPads and M2 Macs has been gratifying. We’ll be working very hard to deliver product to everyone who wants them.”

    “We have no comment on rumored future products. We’ll let you know.”

    “Our active installed base reached an all time high as did our active iPhone base. We anticipate crossing the 2 billion user mark and 1.3 Billion iPhone users by end of 2022.”

    “Paid subscriptions exceeded 900 million across all services on our platform, a new all time record. We see that growth continuing in Q1.”

    “We continue to see solid revenue of greater than 55-58% from non-US regions. China has been a particular growth area reflecting improvement from 2021. We are really encouraged by the China region and our users. Similarly, India has blossomed as our manufacturing and sales efforts there have seen gratifying results. We are excited for continued growth in these vital growing regions.”

    “While we are still unable to provide specific guidance due to prolonged Covid, macroeconomic and world event uncertainties, we remain positive on our Q1 outlook with regard to product demand and our robust supply chain. We do not see supply – demand balance until well into Q2.”

    September 21, 2022

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