Courtesy of Apple
Analysts don’t seem to be too concerned over the lackluster interest for Apple’s latest mid-tier iPhone.
Preorders for the less expensive $749 iPhone XR became available last Friday. The XR will officially go on sale on Oct. 26. The release comes after Apple launched the $999 iPhone XS and the $1,099 iPhone XS Max last month.
Initial demand for the new
(AAPL) model is falling short of Wall Street’s expectations.
Nomura Instinet analyst Jeffrey Kvaal said the XR’s shipment time for its first weekend was around 10 days.
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“This is in line with last year’s iPhone 8 Plus. We consider this mildly disappointing (though only mildly) given conjecture consumer buying activity or telco promotions would be higher with the $749 XR,” Kvaal wrote on Sunday.
Rosenblatt Securities analyst Jun Zhang saw mixed results in China too.
“IPhone XR preorders have been weaker than our expectations,” Zhang wrote on Monday. “IPhone XR pre-orders are similar to iPhone 8/8+ preorders in China last year, and slightly better than the 1.5 million XS/Max preorders in China. This is not a very exciting result.”
Apple stock is up 1.6% on Monday after the reports.
As a result, Zhang predicts Apple may lower its iPhone XR production levels in November and December.
But the analyst maintained his Buy rating for Apple stock, predicting the higher profitability of the iPhone XS Max and iPad Pro will boost its earnings.
In similar fashion, KeyBanc Capital Markets’ Andy Hargreaves predicts strong sales from Apple’s higher-priced models, driving near-term profit forecasts higher.
“We expect Apple’s pricing strategy throughout the iPhone lineup to drive upside to consensus gross margin expectations in F4Q (Sept.) and F1Q (Dec.), which should be positive for EPS estimates,” Hargreaves wrote on Sunday.
If he is right, Apple may add to its big gains so far this year.
In August, Apple became the first publicly traded U.S. company to reach $1 trillion in market value. And the stock has rallied more than 30% year-to-date versus the S&P 500’s 3% gain.
The company will report its fiscal fourth-quarter earnings results on Nov. 1.
Write to Tae Kim at firstname.lastname@example.org