Rosenblatt’s Jun Zhang sees iPhone XS inventory piling up, expects sharp production cuts.
From a note to clients that landed on my desktop Monday:
Our channel checks indicate iPhone XS and iPhone XS Max weekend sales are higher than iPhone X weekend sales. We believe this is mainly due to a better production ramp for the iPhone XS and iPhone XS Max. However, our research suggests the iPhone XS order pipeline is very weak, resulting in leftover inventory of the iPhone XS. We continue to believe total iPhone XS and iPhone XS Max sales will be lower than total iPhone X sales over a two-month period…
Overall, we believe iPhone XS and iPhone XS Max weekend sales were weak. Based on retail sales data and our estimates of production, we estimate a combined total of ~7 million units sold over the weekend. Our research suggests the iPhone XS max sold out over the weekend, while the iPhone XS still had some inventory left in various retail channels. We believe iPhone XS Max sales were about 4-5x iPhone XS sales over the weekend.
Both the iPhone XS and iPhone XS Max 64G are available for immediate shipment, while the iPhone XS Max 512G has a shipment wait time. Apple’s ASP and gross margin should benefit from the quick sellout of the iPhone XS Max 512G.
Based on recent iPhone XS and iPhone XS Max data, we believe iPhone XS production for the second half of 2018 will be cut from 15 million units to 10 million units. iPhone XS Max sales are steady, but we will have a clearer picture on sales when the iPhone XR is released.
Maintains Buy rating and $200 price target.
My take: Other analysts have suggested the same—iPhone XS Max sales strong, XS sales weak, wait for the XR—but not with the same sense of Apple doom. How Zhang can maintain a buy rating if he thinks the stock is going down is still a mystery to me.