UBS Asia Tech highlights that demand for iPhone 7 remains disappointing in China
Apple Inc. (NASDAQ:AAPL) iPhone 7 continues to perform below expectations in the international markets, especially in China. UBS analyst, Steven Milunovich, has become tad more cautious on the stock following the recent channel checks. UBS Asia Tech and Hardware analyst, Arthus Hsieh, has commented that iPhone volumes are expected settle below expectations as compared to that of its predecessor last year; he estimates a total of around 74 million units to be sold during the first quarter of fiscal 2017 (1QFY17).
According to Mr. Milunovich the new estimates imply some yearly deceleration. The previous estimate was 75 million units during the quarter, but the recent channel checks suggest that Apple might not meet that check point. The estimate of 74 million units during first quarter (1Q) implied 1% deceleration from the past year. The analyst also provided initial estimates for the 2Q and believes that the tech giant could ship around 42 million units during the three-month period. This also represents a significant deceleration from 43 million units last year. Despite reduction in estimates UBS is of the opinion that there are certain positives that will keep Apple’s shares afloat.
The iPhone 7 plus has surprisingly been more popular than the stock version and the analyst believes the volumes could accelerate in near-term pushing the ASPs higher. He expects Apple to ship around 26 million units of iPhone 7 Plus during 1Q.
To conclude his remarks regarding the iPhone volumes, the analyst suggested that it would too early to project volumes for 2Q; however, it is expected that Apple might be taking a conservative stance.
The analyst reaffirmed Buy rating with a price target of $127 for AAPL stock. Of the total analysts covering the stock, 16 suggest a Buy, six a Hold, and one recommend Sell rating. Apple’s shares currently trade at $111.68, as of 12:37PM EST.