Apple (AAPL): iPhone7 Survey Supports Munster's Bullish Expectations - Piper Jaffray

July 11, 2016 7:10 AM EDT
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Price: $194.27 +1.01%

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    41 Buy, 22 Hold, 6 Sell

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Piper Jaffray analyst, Gene Munster, reiterated his Overweight rating on shares of Apple (NASDAQ: AAPL) after conducting a survey of 400 US iPhone owners regarding the iPhone 7 launch. There were two core takeaways: 1) early expected demand was largely in line with the analyst's bullish expectations of 15% of owners expecting to upgrade in the fall and 29% maybe to upgrade, 2) 67.5% of iPhone owners in the US own an iPhone 6/6 Plus or older device, meaning they would fall in the typical two-year carrier upgrade window.

Of the iPhone owners surveyed, 14.8% currently plan to upgrade to the iPhone 7 in the fall, while 29% may upgrade to the new device. The analyst views this as in-line with his expectations since we are still over two months away from the official launch and most consumers are not tuned into the Apple rumor cycle. He expects the percentage of consumers that plan to upgrade to the iPhone 7 to increase following the announcement.

Since 67.3% of iPhone owners in the US have an iPhone 6/6 Plus or older, they would fall into the typical carrier upgrade window during the iPhone 7 cycle. He believes this demonstrates a large upgrade base available to move to the iPhone 7.

The analyst remains comfortable that the iPhone 7 cycle will be flattish from the iPhone 6 cycle two years ago, which would imply 12% y/y growth off of the iPhone 6S.

No change to the price target of $153.

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 $96.68 yesterday.

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Piper Jaffray, Gene Munster