Evercore: iPhone lead times are, ahem, expanding

Stay long on Apple, says analyst Amit Daryanani.

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

ALL YOU NEED TO KNOW: The iPhone 14 lineup has been available across most geographies for a few weeks now and lead-times have expanded (not a typo) since last week for the Pro & Pro Max models across all the geographies we track (ex. Japan) by ~1-6 days – the strong demand is in stark contrast to recent concerns around demand slowdown. Our assessment remains – that while units will be stable to slightly up, the real story here is ASPs will be up high single digits in H2, enabling upside to not just the Sept-qtr, but likely Dec-qtr....

The iPhone 14 Pro and Pro Max are now seeing time to first delivery estimates of 25 days and 32 days for the U.S., while China carries even more extended lead times of 29 and 36 days, respectively. Notably, lead times in China for the lower-end iPhone 14s are now materially higher than other geographies. Amongst the other countries, on a broad level, demand is relatively weaker for the lower-end segment of the iPhone market compared to the Pro models (lead times of ~3-5 days for the iPhone 14, although noticeably better vs. last week). Japan is seeing continued extended lead times for the 128GB Midnight/Starlight versions of the iPhone 14. So far, Japan remains the only country to show consumer preference towards storage size or color in the current cycle.

Worth noting demand in countries like China & India is not only strong but skewing towards the high-end models.

Net/net: Expanded lead times for the Pro models suggest consistently strong (better?) demand for the iPhone 14 Pro and Pro Max, which would likely have a materially positive impact on both mix and margins.

Maintains Outperform rating and $190 target. 

My take: Data points lost in the wind.

22 Comments

  1. Daniel Epstein said:
    One of the interesting experiments that this year’s Iphone release is doing is the timing and interpretation of the Iphone 14 models hierarchy. In the past the base model Iphone (in this case the 14) was expected to be the best seller quantity wise due to its combination of cost and size compared to the rest of the line. Also usually it was the first to be delivered. This year has been different. The 14 Pro models and the base 14 are basically available to be ordered at the same time. The Pro models have been clearly favored by early adopters. After all they are real strong upgrades compared to the base models. The upgrades in the base 14 are not as significant to many as in year’s past and the price competition of the Iphone 13 model may be factoring in to the reception of the 14 base model. $200 less for the 13 seems like a sale. Also over time as actual deliveries of the 14 Plus and reviews come out it may turn out the base 14 is less attractive than previous base models were over time. This could be throwing off people’s understanding of what should be selling more or less in the product line. The proof will come out later in October as to how this is really playing out. Maybe the stock price is being punished for this change which may turn out to be an actual gain.

    3
    September 30, 2022
  2. Neal Guttenberg said:
    What kind of earnings and guidance will Apple have to report to stabilize the ship or get things moving in a positive direction? I know Apple hasn’t done any real guidance the past couple of years so what will the analysts have to be predicting to get Apple’s share price to move positively?

    Apple, to me, still seems like a safe haven. I will be holding onto my shares for the foreseeable future.

    4
    September 30, 2022
    • Bart Yee said:
      @Neal
      IMO, in this current inflationary and macroeconomic environment, even positive guidance with some factual basis would still be ignored by Wall Street and maybe even debated as wrong by some analysts. With overly strong dollar, prospects for additional interest rate hikes, and pressure on consumers to rein in demand, these factors will dampen any short term positivity for analysts and the market, unfortunately .

      IMO, Wall Street is in a pessimistic funk and will see anything as negative and fitting the broader picture they see right now.

      Example, Apple – 4Q is good to positive – WS will say “yeah, but next quarter could be worse and demand just can’t keep up, plus consumer spending MUST decelerate.”

      Apple – “we’ve managed forex headwinds reasonably and will see a bit more in Q1, but we expect it to plateau soon.” WS – “See, SEE!!?!? Told you, can’t raise prices more to compensate, yet your prices are too high now so demand will drop, Apple is doomed!”

      Apple – Supply has been steady ramp up, demand has been solid for Pro models, we feel confident about Q1.
      WS – “Demand has to crack as the economy finally weighs even on Apple users, even if Q1 is great, Q2 will inevitably be less and production cuts will happen sooner than later. Apple is doomed as is the rest of the World’s economies.”

      3
      October 1, 2022
      • Neal Guttenberg said:
        Bart,

        There are more people who like Apple these days(like Warren Buffett) and so the reality distortion field about Apple may be somewhat less of an issue than in the past. But your scenario could definitely play out. We will just have to wait and see. The nice thing is that there are sites like this one and HD’s site where Apple gets a fair shake without being pushed to the side as being fan boyish.

        1
        October 1, 2022
  3. Bart Yee said:
    Gee, great design and construction, fundamental production execution, and knowing what their upscale customers like and want leads to…demand for your products.

    Lead times expanding for the Pro Models, and slowly lengthening times for the base model in the 2 weeks after deliveries commenced. Who knew?

    4
    September 30, 2022
  4. Brian Nakamoto said:
    The two iPhone 14 Pro Maxes (1 TB, Deep Purple and Space Black) I ordered from Xfinity Mobile on Sep. 16 aren’t expected to arrive until the first week of Nov. Has anyone seen any reporting about if iPhone 14 supply constraints are due to assembly, or component bottlenecks? I guess Pro demand bodes well for Apple either way but it’d be nice to know that A16 Bionic yields are normal, etc. Apple will present their quarterly report before before the iPhones I ordered arrive.

    3
    September 30, 2022
    • Bart Yee said:
      @Brian My son wanted to upgrade to the iPhone 14 and found his iPhone 8 would get $300 trade in value with ATT, our regular carrier. I helped him move up to the 14 Pro 256 Black but none available in store in our section of LA. So he ordered from ATT on 9/21 for delivery 10/3, but actual delivery came on 9/26! Must have gotten a batch in and not as demand constrained as your choices?

      He really likes it, a bit bigger of course, and he’s adapted to no Home Button, full screen display gestures, and much much better camera system and photos.

      2
      September 30, 2022
  5. Aaron Belich said:
    My only concern is I’ll run out of dry powder before WS finds the bottom for AAPL.

    Today was another good day in my book, I’ve got 20+ years before I need to consider selling any AAPL. (Less something gets ugly in Apple management).

    4
    September 30, 2022
    • Bob Goldstein said:
      @Aaron please explain how Apple going down $4.28 today is another good day for Apple. Out in the real world that is considered a terrible day. The day by day, month to month does not effect me, I am extremely long and plan to stay that way but I would never say losing $4.28 is another good day.
      In my opinion buying on the way down is a good way to lose your money. I’m sure you have heard the term”trying to catch a falling knife”
      Forgive me if you think I am being critical, I’m just trying to understand how having your net worth drop is a good thing

      0
      September 30, 2022
      • Aaron Belich said:
        @Bob Goldstein

        I’m building my net worth. I’m dollar cost averaging all the way down to wherever we find bottom, less I run out of dry powder.

        Pardon the phrase, but I’ve gone all in too high on previous “big drops” in my short time in this game. Only to miss the greater opportunities, and I have no interest in playing with leverage. So, I’ve focused on share prices at specific levels that I’ll take advantage of weekly.

        So big drops on the days I have scheduled for AAPL purchases is fine in my book given there’s often a 20-30% appreciation within six months of such drops.

        I said it was a good day for “me”, not “Apple” nor “AAPL”, or anyone relying on AAPL has a current source of income.

        Cheers to the longs!

        5
        October 1, 2022
        • Bob Goldstein said:
          Best of luck with your investing plan

          1
          October 1, 2022
  6. David Emery said:
    “My take: Data points lost in the wind.”

    The one measurable data point on the actual APPLE PRODUCT is ignored, because it can’t be used to spin a story like rectal sampling within Apple’s opaque supply chain. You gather more clicks by generating a (potentially false) narrative against Apple than actually looking at the best evidence.

    p.s. I’d add a video link to Kansas “Dust in the Wind”, but that would probably get the post quarantined…

    1
    September 30, 2022
  7. Fred Stein said:
    Upvoted nearly all FOB’s.

    Why are so many analysts and rumor mongerers wrong?

    Apple did NOT increase prices because they and TSMC play the long game keeping the BOM low enough to compensate for the strong dollar. Demand is strong. Duh. Cleary both are winners even if the market does not see it.

    Users gladly pay up for ‘Pro’, because 75% of the IB are on iPhone 12 or earlier. Its cameras rock. And the Pro is less than 2 cappuccinos a month more expensive.

    2
    September 30, 2022
  8. Fred Stein said:
    One more, actually two.

    Holiday shopping, then Chinese New Years. Need I say more?

    That big bad Watch Ultra. Yeah baby it will sell, and how.

    2
    September 30, 2022
  9. Gary Morton said:
    I have been away for one week and came back to the US today to find that two journalists with a clear history of inaccurate reporting on Apple’s supply chain have catalysed a 10%+ decline in the share price of the most valuable company in the world. On top of that, lead times are increasing on the products those journalists claimed were not seeing as strong a demand as expected. Did I travel through some kind of inter dimensional reality distortion field? Did investors suddenly lose all measure of objectivity last week? Bizarre.

    8
    October 1, 2022
    • Daniel Epstein said:
      Not sure investors ever are measured in their objectivity. But a lot of people are so negative about the stock market in general that they insist every stock has to have bad news as the dominant story. So a non story becomes a stock market move which then gains momentum. Think of a stampede as people try to time the market.

      1
      October 1, 2022
  10. Jonny T said:
    What, didn’t Tommo U.K. post on this article!! I wonder why.

    0
    October 1, 2022

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