Apple (AAPL) ASPs Could Surprise to the Upside, RBC Says

October 7, 2016 8:17 AM EDT
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RBC Capital analyst Amit Daryanani said based on their recent iPhone 7 survey results, they believe Apple (NASDAQ: AAPL) ASPs (average selling price) could be the 'WOW' factor this EPS season.

"Our survey work around iPhone 7 and analysis suggests AAPL could see ASP's flat to up modestly on a y/y basis vs. current street models that are modeling ASP’s down ~5-10%," Daryanani said.

This views is based on:

1) We think demand is substantially skewed towards 7+ this product cycle vs. prior two years; our survey work shows ~700-800bps of incremental demand towards the 5.5” form factor vs. last year, 2

) AAPL actually raised pricing on iPhone 7+ and is charging a $120 premium vs. a $100 premium historically,

3) Memory – overall this could be a modest headwind but broadly consumer preference remains around the "mid-tier" phone vs. low-end.

Net/net, the analyst said, "While we realize expectations are getting high, we think AAPL could show not only modest revenue upside in Sept-qtr, but more importantly, provide a more robust Dec-qtr guide, that would be materially ahead of street expectations."

The firm maintained an Outperform rating and price target of $125.

Apple is scheduled to report Q4 2016 results on October 25, 2016 after the close.

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $113.89 yesterday.

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