RBC Capital analyst, Amit Daryanani, thinks Apple's (NASDAQ: AAPL) iPhone SE has a gross margin of 35% and will contribute $0.23 in earnings to 2016. This represents a significant drop from the mid 40s that Apple generates from other iPhones broadly.

Most of the components in iPhone SE were previously used in either iPhone 6/6s or 5s, leading the analyst to think prices for the same components have likely come down by >10% reflecting better scale and importantly price concessions from component providers, especially considering some of the components were likely from excess capacity for 6s. Fundamentally, we think iPhone SE could provide revenue/EPS benefit of $6.8B/$0.23 in CY16 with an assumption they are able to sell an incremental 15M units over the next 6-12 months.

No change to Outperform rating or $130 target

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Shares of Apple closed at $108.99 yesterday.