Following a relatively weak September in which MNC (multinational corporation) shipments were down 31.6% year-over-year and dropped by 20.1% sequentially, China’s smartphone market saw a meaningful uptick in October in both the broader market and iPhones, specifically.
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Smartphone data indicates that MNC shipments increased by 88.3% year-over-year and were up by a huge 817.5% month-over-month. As shipment data is no longer broken down by operating system, and Apple (AAPL) accounts for more than 90% of the multinational (MNC) shipments, Evercore’s Amit Daryanani believes this serves as a “reasonable proxy” for the health of iPhone demand.
Looking at the soft September metrics, Daryanani believes these were due to several “potential factors,” one of which is that that the prior launches (2019, 2018, etc.) occurred several days earlier in the month than this year’s September 21 launch. “We therefore view the recent October data as a more useful indicator of strength in the iPhone 13 cycle,” the analyst noted.
For the December quarter, consensus estimates currently see iPhone revenue rising by ~73% sequentially and ~2-3% from the same period last year. While this amounts to a significant sequential uptick, given last year’s iPhone release was put back until the end of October, year-over-year comps will therefore be more problematic.
What’s more, given the iPhone’s already high penetration rates – i.e., “everyone that wants an iPhone has one” – Daryanani does not expect iPhone sales to exhibit the previous outsized growth or reach the $165 billion “high watermark” from FY18. That said, Daryanani expects decent growth and foresees “continued strength ahead.”
“Net/net,” the 5-star analyst summed up, “The month of October represents the first full month of data on demand for the iPhone 13 lineup (as well as AAPL’s ability to ship iPhones in the face of ongoing supply challenges), and the data suggest high demand that is encouraging in terms of AAPL’s ability to meet it.”
All in all, then, Daryanani sticks with an Outperform (i.e., Buy) rating and $180 price target, suggesting shares will climb ~10% higher from current levels (To watch Daryanani’s track record, click here)
Turning now to the rest of the Street, the average price target stands at $168, implying a modest upside of just 3%. Looking at the consensus breakdown, Apple’s Moderate Buy consensus view is based on 21 Buys vs. 5 Holds and 1 Sell. (See Apple stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
