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Apple (AAPL) iPhone 6 First Weekend Sales Could 'Disappoint', Bernstein Says

September 17, 2014 3:47 PM EDT
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Bernstein analyst Toni Sacconaghi weighed in Apple (NASDAQ: AAPL) today to give prospective on first weekend iPhone 6 sales after the company announced on Monday that over 4 million iPhone 6's and 6 Plus's were pre-ordered in the first 24 hours. Sacconaghi notes that Apple historically has announced first weekend sales results on the first Monday morning following each iPhone launch, which this year will be Monday, September 22nd. He warned that the numbers could disappoint some high expectations, but said that investors should not fret.

Sacconaghi believes that Apple's pre-orders of 4 million+ should be viewed positively. "We note pre-orders for the iPhone 5 were 2x pre-orders for the iPhone 4S, and units increased 30%YoY in the following quarter; a similar increase vs. the iPhone 5 would imply ~62 million units shipped in FQ114, likely above expectations, particularly given a delayed China launch." The analyst notes buyside chatter to date has been that Apple might ship 60M+ iPhone units in December, including a full quarter of sales in China.

While positive, Sacconaghi cautioned that first weekend shipments for the iPhone 6/6+ may not match or eclipse the 9 million 5S/5C's shipped last year for several reason: (1) Apple's pre-order announcement and customer expected delivery dates point to stronger supply constraints vs. prior years; (2) China is not included as a launch country; and (3) there is no lower cost SKU (like the 5C).

Sacconaghi estimates that first weekend shipments could be more in the range of 7-8 million units and said while this may disappoint expectations that are as high as 10 million units, investors should not be worried.

"Although we see the potential for first weekend sales to disappoint vs. expectations that now appear to be as high as 10M+ units, it is important for investors to keep in mind that "first weekend sales" are principally a function of available supply rather than iPhone demand, as they represents actual shipments to customers and channel partners vs. "orders" (which may or may not have shipped)," Sacconaghi said. "Accordingly, we would view any "disappointment" as a potential red herring, given the ostensible greater-than-normal supply constraints Apple appears to be experiencing. Ironically, a slower ramp may ultimately be beneficial for Apple – a later China rollout (and later Chinese new year) could push sales into CY Q1, helping smooth the iPhone's typical March quarter falloff, and Q2 could benefit from the iWatch launch."

The firm maintained an Outperform rating and price target of $108 on Apple stock.

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 $100.86 yesterday.



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