Apple (AAPL) iPhone 8 Super Cycle May be a Dud - Wells Fargo
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Wells Fargo analyst Maynard Um said bullishness on Apple's (NASDAQ: AAPL) next iPhone cycle should be tempered as their units per carrier analysis suggests headwinds in 2017.
Um said while the general feedback is that the iPhone 8 cycle will be strong based on the premise that even a modest
upgrade rate of the 500MM+ iPhone user base would result in an up year over year units, he sees two inherent flaws with this thinking: 1) not all of the 500MM is what we would consider eligible (we think hand-me-down iPhones, for example, to one’s child or even low-end iPhone sales in some emerging countries should not be included in the base) and 2) it ignores the cyclicality and subscriber eligibility evident from our proprietary units per carrier analysis, which suggests the iPhone 8 may have headwinds.
The analyst also note that the current free iPhone 7 promotions by carriers may impact the 2018 cycle as those that upgrade would see an increase in their monthly bills if they upgrade.
Um maintained a Market Perform rating and $105-$120 valuation range as they believe there will be mounting concern over the March and June quarters and, while recent data points have been positive, believe they may not be as bullish as the headline data suggests.
Shares of Apple closed at $113.55 yesterday.
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