Samsung Galaxy Note 7 Halt a Positive for Apple (AAPL) - RBC

October 11, 2016 1:26 PM EDT
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RBC Capital analyst Amit Daryanani weighed in on Apple (NASDAQ: AAPL) amid news rival Samsung is halting production and sales of its Galaxy Note 7.

"We think the discontinuation of the Samsung Galaxy Note 7 should enable incremental share gain opportunities for the iPhone 7+, which will be a positive for AAPL, particularly if we see mix shift toward the 5.5" device which carries a $120 premium vs. the standard 4.7" form factor," Daryanani said.

He added, "Assuming ~20% of the 2.5M customers with the affected Samsung devices switch to the iPhone 7+, we think AAPL could see incremental revenue (~$400M) and EPS ($0.02-0.03) upside for AAPL's Dec-qtr. This is in addition to the larger share gain potential from the 10M+ unit opportunity (original Note 7 forecast) up for grabs for Dec-qtr (20% of this opportunity would be materially positive for AAPL). Longer term, the absence of a high end, large form factor competing offering from Samsung should help drive a stronger than initially feared iPhone 7 cycle for AAPL. Net/Net – The sales halt of Samsung's Note 7 should help provide an incremental lift not only for the Dec-qtr guide, but also upside potential throughout the duration of the iPhone 7 cycle."

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

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 $116.05 yesterday.

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