The Analyst With The Lowest '17 iPhone Estimates Sees '18 As Apple's (AAPL) Turning Point - Oppenheimer

Oppenheimer analyst, Andrew Uerkwitz, reiterated his Perform rating on shares of Apple (NASDAQ: AAPL) and introduced FY18 estimates. He highlights that his F17 estimate is the lowest on the street, 10% below consensus, and believes that consensus is not low enough to account for the elongated iPhone cycle. That said, he is above the street for iPhone unit shipments in 2018 and at 245 million units he tops consensus by 3%.

The analyst is expecting a decline of 6.4% Y/Y to 197M units, due to a weak replacement cycle, competitive threats, and tough iPhone SE comps. The consensus estimate is at 221M units, or 5% growth Y/Y. We believe consensus estimates are at risk for the coming March and June quarters. Based on available public information about the iPhone 7, he believes the new features (dual camera, pressure-sensitive home button, and wireless charging) and minor design changes are unlikely to either drive enough existing users to upgrade sooner or attract more switchers than before from Android devices.

Why will 2018 bring an acceleration in growth? The analyst believes the 2017 iPhone will see substantial design changes that may drive stronger demand, potentially shortening the elongated replacement cycle. He sees the 2017 iPhone as Apple's attempt to catch up in mobile VR.

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 $108.37 yesterday.

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