A new survey suggests Apple Inc. (Nasdaq: AAPL) investors may not get the 2018 iPhone supercycle they had been hoping for. However, UBS analyst Steven Milunovich says 2018 iPhone unit sales growth shouldn’t be a concern for investors.
UBS recently conducted its semi-annual smartphone survey of more than 6,700 international smartphone users and found that Apple’s 2018 iPhone unit sales may be on the soft side. UBS found that the percent of users who plan to buy an iPhone over the next 12 months is “flat to down” compared to where it was a year ago. In addition, UBS found that only 24 percent of respondents who plan to buy an iPhone in the next year intend to purchase the high-end iPhone X model.
UBS has lowered its fiscal 2018 iPhone unit growth estimate from 12 percent to 10 percent. But while a softer iPhone unit sales number in fiscal 2018 may be disappointing to some investors, Milunovich says less 2018 demand means more 2019 demand is likely.
He also says iPhone average sales price and margin are getting increasingly more important for Apple investors than unit sales numbers. UBS is forecasting at least two more years of double-digit iPhone unit sales growth, but the rising average selling price may be the bigger story. In addition, Milunovich says Apple will be looking to increase its revenue per user.
“If the survey is correct regarding more muted near-term unit growth, the Apple narrative could shift toward monetizing the large iPhone base,” Milunovich says. “Longer term, we believe Apple’s ability to keep consumers in the iOS ecosystem enables sustainable growth as users are monetized through new products and services.”
The UBS survey also revealed several bullish international iPhone trends as well. Looking ahead to the next 12 months, demand for iPhones appears to be trending positively in China. Roughly 40 percent of Chinese and Japanese buyers plan on buying the higher-margin iPhone X as well.
Apple also maintains a high level of customer loyalty. The survey revealed…
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