Apple Inc. AAPL 0.56% investors haven’t known quite what to make of reports that iPhone 8 demand has fallen short of expectations. Low demand would typically be bad news for Apple. But in this case, it could simply be a sign that Apple customers are holding out for the iPhone X.
As a result of this phenomenon, Bank of America has lowered its expectations for Apple when it reports earnings Thursday. Analyst Wamsi Mohan said on Tuesday that Apple will likely report lower-than-expected iPhone average sales prices for the third quarter, but the iPhone X could make up for the short-term weakness in 2018.
“We lower our total iPhone unit estimates for the Dec quarter to 74mn (from 77mn), but Mar quarter units remain at 59mn, with iPhone X modeled at 30mn/35mn, respectively,” Mohan said.
A new survey by Piper Jaffray supports the idea that Apple investors shouldn’t get hung up on third-quarter numbers. Analyst Michael Olson said on Tuesday that a higher mix shift of iPhone X models in the current cycle is a positive for Apple earnings.
“We moved 6M iPhone units from Dec-17 into the Mar, Jun & Sep-18 quarters as potential iPhone 8 buyers may wait to see iPhone X before buying either model and inventory shortages of iPhone X weigh on near-term unit sales,” Olson wrote.
Exactly half of the iPhone users surveyed reported they will or may upgrade their iPhone this year compared to only 35 percent who intended to upgrade at the same time a year ago.
Loop Capital analyst Ananda Baruah has also adjusted iPhone expectations ahead of earnings. “The gist of our view is that Street leans high on iPhone units in September & December but low in March and that Street iPhone ASPs are substantially low given mix of iPhone X (we’re at blended iPhone ASPs of $670 / $775 / $800 vs. Street at $638 /$747 /$738),” Baruah wrote on Tuesday.
Bank of America maintains…
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