New Apple (AAPL) iPhone Procurement Estimates Suggest Near-Term Weakness - UBS
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UBS analyst Steven Milunovich issued some cautious comments on Apple (NASDAQ: AAPL) after UBS Asia Tech Hardware Analyst Arthur Hsieh has updated his iPhone procurement estimates.
Procurement estimates for F1Q-2Q/17 are down YoY, putting current consensus estimates for unit shipments growth in December and March at risk, the analyst notes.
Procurement numbers for Dec are revised down to 74mn from 75mn units, a 1% decline YoY. New estimates for March are 42mn units, down from 43mn last year. Units continue to shift toward the 7 Plus with 26mn estimated in F1Q/17 vs 17mn units in F1Q/16.
"We still believe the guide for Dec implies at least moderate unit growth," Milunovich notes. "It's too soon to make a call on Mar since Apple might be conservative with its supply chain to avoid repeating last year's mistake of overestimating demand. Even if units were slightly down in Mar, many investors are already looking to F18 where high retention rates and an aging installed base could drive significant upgrades."
The firm maintained a Buy rating and price target of $127 on AAPL. While the March and June quarters could have downside risk, it might not matter if investors remain optimistic about F18, the analyst said.
Shares of Apple closed at $111.57 yesterday.
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