Stifel Sees Apple (AAPL) iPhone 7/7+ Pre-orders as Reflective of Strong Installed Base; Affirms at 'Buy'
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Stifel affirms Apple (Nasdaq: AAPL) with a Buy rating and $120 price target following recent carrier numbers for iPhone 7 pre-orders.
Analyst Aaron Rakers noted the following on Tuesday:
While the iPhone 7 update is more revolutionary than evolutionary, we believe investors could consider these strong early pre-order indications as being reflective of the impact of Apple’s significant iPhone installed base expansion over the past few years – our model implies ~675M installed base exiting the June 2016 quarter; estimate ~200 million pre-iPhone 6 installed base. As we have previously reported, our analysis of U.S. Carrier data suggests that C2Q16 postpaid upgrade rates were the lowest level we have seen since 2013 during the June quarter – our analysis of AT&T, Verizon, Sprint and T-Mobile finding a 6.1% weighted upgrade rate in 2Q16, down from 6.5% in the prior quarter and a decline of more than 170bps y/y.
As a reminder, the iPhone 7 will be shipping for nine days during the September quarter, which compares to only 2 days of shipments in the September 2015 quarter. We believe Apple’s product velocity is also a key consideration this year as iPhone 7 initial availability (September 16th) will be across 28 countries in the first week and followed by the launch across 30 additional countries in the following week. This compares to the iPhone 6s launching in 12 countries during the first week of availability in 2015 and the iPhone 6 cycle having 10 countries available during the first week and an additional 22 countries in the following week in 2014.
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