Goldman Sachs: Bullish on Apple’s new iPhone sales, but…

Goldman analyst Rod Hall is sticking with his street-low $164 price target.

From a note to clients that landed in my inbox Friday:

Heading into FQ4, our main focus is on September guidance and what that implies about new iPhone launch timing and ASP expectations. For our part we continue to be materially ahead of consensus for the September guide on ASPs driven by our detailed SKU level model. We also look for more color around Apple’s thinking on price elasticity at the high end though it is unlikely the company changes its generally positive tune there. Services growth and commentary on qualitative developments in that area are also of interest to us including any additional color on continued video content newsflow. Finally, the June quarter share repurchase rate will be an important metric to help us gauge how quickly Apple is utilizing their current authorization.

iPhone revenue guide and implied ASPs in focus. We forecast iPhone shipments of 47mn units in FQ4’18 (September quarter), in-line with the Street (based on FactSet consensus). However, our September quarter iPhone ASP of $732 is 4% ahead of consensus and is driving our FQ4’18 iPhone revenue forecast 2.6% ahead of consensus. If anything, we believe our ASP forecast is cautious given a likely earlier iPhone launch this year.

Upcoming iPhones availability and FQ4 shipments… We model one week of availability of the upcoming new iPhones – we expect two OLED versions and one LCD version – in the September quarter, similar to the historical trend of 1-2 weeks of new iPhones availability in September. Again, if anything we believe this could be cautious by one week. We forecast ~17mn units of new iPhone shipments in FQ4’18 to September.

Maintains Neutral rating and $164 price target.

My take: I may put too much weight on these 12-month price targets, but it’s striking how differently Hall (who joined Goldman Sachs in January) treats them compared with his predecessors: Bill Shope (retired in Sept. 2015), and Simona Jankowski (left in August 2017 to run investor relations at Nvidia). See chart below. 

See also:

• Jan. 2016: Why Goldman Sachs Thinks Apple Is a ‘Compelling’ Buy
• Nov. 2017: Goldman Sachs dumped 19 million Apple shares last quarter