Canaccord Genuity trims '19 iPhone estimates 13%

“We continue to believe Apple can sustain double-digit Services revenue growth driven. — Analyst T. Michael Walkley

From a note to clients that landed on my desktop Saturday, two days late:

Lowering iPhone unit sales estimates: With our survey work indicating declining sell through share and disappointing overall sales due in part to soft smartphone demand combined with relatively high inventory levels, we are lowering our iPhone estimates. While we believed the lower-priced iPhone XR would generate strong sell through trends, our surveys indicate muted demand versus our expectations. Feedback for lackluster initial sales included its inferior quality perception given its aluminum construction versus the XS and XS Max, lack of HD screen, and viable lower-cost alternatives in the older iPhone X and 8 models. We have reduced our C’19/C’20 iPhone unit sales estimates from 180M/194M units to 177M/191M units.

Steady iPhone sales to growing premium tier installed base supports strong long- term ecosystem growth: Despite softer near-term iPhone sales trends, we anticipate Apple will sell over 175M iPhones annually helping to drive a growing ecosystem to drive ancillary revenue streams. We continue to believe Apple can sustain double-digit Services revenue growth driven by growth from the App Store, strong subscriber growth in Apple Music, Apple Care, iTunes/iCloud and Apple Pay. Further, our survey work indicates strong performance of wearables consistent with Apple’s pre-announcement indicating wearables grew nearly 50% year-over-year in the December quarter.

Reiterates Buy rating and $190 price target.

My take: Wish I had the details of his survey work, especially on wearables.