Apple’s new iPhones launch broadly as expected
Apple’s new product launch leaves little room for further upside on already priced in expectations
The launch of the new iPhone 8 from Apple (AAPL US, HOLD, TP USD 160 unchanged) was broadly in line with expectations in terms of format, features, pricing and even shipping dates. The iPhone 8 and 8 Plus will be launched on 22/09/2017 with prices starting at USD 699 (USD 50 higher vs. previous release) and the iPhone X is priced in a range from USD 999 to USD 1149 and shipping date is delayed to 03/11/2017. Apple also presented a new Apple Watch, which works independently from an iPhone and a 4K Apple TV box. The new format and features of the expected top seller iPhone X (OLED display, face recognition, no home button, AR capabilities etc.) should in our view lead to a strong replacement cycle despite the heavy price increase. However, we believe that this is vastly priced in. Current share price and EPS consensus estimate for FY 2018 imply that Apple has to sell around 250 m units (this would be a 8% higher number compared to the last record sales in 2015 where we had the strong iPhone 6 replacement cycle).
In addition, the average selling price has to reach at least USD 720 which would be a 10% increase vs. last year. While we wouldn’t rule out that Apple can achieve these record targets, we also believe that for the time being there is little room for further upside on expectations, particularly with regard to the delayed shipping date of the expected top seller product. We are maintaining our HOLD rating and USD 160 target price.