As analysts gear up for the presumed September launch of the iPhone 7 and the rush of buyers over the holiday season, it appears they expect Apple Inc. (NASDAQ: AAPL) to hit 70 million unit sales over that period. Anything less, it seems, would signify the launch was a terrible debacle.
Two notes from Barron’s set the bar.
Bernstein’s Toni Sacconaghi wrote:
While March quarter and FY 17 estimates may be more aggressive, investors are likely to look past any downward revisions post the December quarter, and focus on the iPhone 7S/8 that will be launched in mid to late 2017, which is expected to be a significant upgrade. We see the biggest risk to near-term momentum being very weak December guidance (implied iPhone unit growth of 70M or less). This would point to iPhone units for FY17 of only 200M and EPS of around $8, both likely below buyside expectations, and would raise structural concerns beyond simply a weak current iPhone cycle.
And Barron’s summarized the view of RBC Capital’s Amit Daryanani:
For December, he models Apple selling 79 million units, up 5.6 million from his prior estimate, and above what he thinks consensus is, 74 million.
Daryanani also points out that the last quarter of the year has one more week than in 2015.
Any “beat” of these numbers could take Apple’s stock up to around $140, about a 20% higher than current levels. Giddy investors might even drive it higher.
The road blocks to Apple’s success have not changed. The iPhone 7 cannot just be a better clone of the iPhone 6. It has to have features that leap far ahead of both the iPhone 6 and the best rival Samsung makes. In other words, the public has to be thrilled. The second hurdle is Apple’s flagging sales in China. It now sits in the number five spot in market share. CEO Tim Cook has stated that China is the foundation of Apple’s future.
In the meantime, anything shy of 70 million iPhone sales in the September to December period will be a disaster.
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