Brean Takes A Bite Out Of Apple: iPhone Shipments Might Be Too Optimistic

Brean Capital’s Ananda Baruah believes the consensus iPhone unit volume expectations for the June quarter and the ramping of the iPhone SE volume mix through 2017 could prove too optimistic.

The analyst maintained a Buy rating on Apple Inc. AAPL, while lowering the price target from $170 to $155.

Street Optimistic

“We believe AAPL is tracking to ship ~50M iPhones for the Mar Q, 46M – 48M for the Jun Q, 50M for the Sep Q, and 70M – 75M for the Dec Q,” Baruah mentioned.

While the Buy-Side expectations point to the potential for 1-2 million unit upside for the March and June quarters, Baruah believes the consensus forecasts lean to the optimistic side.

Related Link: Google Troubles, iPhone SE Surprises Both Bode Well For Apple

Excess Inventory Will Go Down

In addition, the analyst noted builds for the March and June quarter continued to be “softer” than the shipments, while pointing out that excess iPhone inventory was likely to be taken care by exiting the June quarter.

Baruah believes “both Mar Q & Jun Q builds are ~45M, with AAPL sitting on 18M – 20M of iPhone inventory, looking to reduce it to ~10M heading into the iPhone 7 launch in mid-September.”

China Pre-Orders

“We believe that the early iPhone SE tea-leaves point to CY16 shipments aligned with the higher end of our original 20M – 25M CY16 view,” the analyst stated, while mentioning the 3.4 million pre-orders in China was a positive and almost as strong as in the U.S.

The EPS estimate for 2017 has been lowered from $11.49 to $10.39.