Daniel Ives dismisses Bloomberg report, sticks with $220 Apple target

"Our positive thesis on Apple remains unchanged and we are not wavering in our view the iPhone 14 Pro demand is robust and this will enable Apple to power through."

From a note to Wedbush clients that landed on my desktop Wednesday:

Last night Bloomberg reported that Apple has decided to maintain production for iPhone 14 and "not increase as expected" given softer consumer demand. Clearly this negative news in light of an already shaky macro and jittery market will send shockwaves across the Street with investors concerned this is another shoe to drop in this dark market with golden child Apple front and center.

Our view is the headline of "not increasing production" (~6 million units) overshadows the underlying story for iPhone 14 Pro demand that is currently playing out in the field.

iPhone Pro demand remains robust based on all data points we see across the US and China and is tilting towards a 85%-90% mix for iPhone 14 vs. ~65% with iPhone 13. This means much higher ASPs and a clear tailwind for Apple into FY23 at this pace. Wait times have extended into early November for some Pro models and we maintain our belief that Apple is shifting production from the base model to Pro across Asia ahead of holiday season.

As we have discussed initial iPhone 14 units was roughly 90 million and is in line with iPhone 13 and that remains firm/unchanged. However the mix is heavily shifted towards Pro while the base model iPhone sales have clearly been underwhelming and softer than Apple expected.

Our positive thesis on Apple remains unchanged and we are not wavering in our view the iPhone 14 Pro demand is robust and this will enable Apple to power through near-term macro headwinds much better than feared by the Street. The softness on the base iPhone model is a clear sign that in this weaker macro consumers are not paying up for a smartphone that is pricey with minimal enhancements from iPhone 13 with the Pro model a complete other story seeing positive demand.

Maintains Outperform rating and (market-high) $220 price target.

3 Comments

  1. Here we have a long reliable source, Daniel Ives, with a research team and a track record of years of verifiable Apple analysis.
    “If there’s something weird
    And it don’t look good
    Who you gonna call?” – Ray Parker Jr.

    9
    September 28, 2022
  2. Gregg Thurman said:
    As did everyone on Apple 3.0.

    2
    September 28, 2022

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