Survey: Santa Is Bringing Strong Apple iPhone X Holiday Sales

Apple Inc. (NASDAQ: AAPL) is poised to record strong holiday sales, according to a Canaccord Genuity survey. 

The Analyst

Canaccord Genuity analyst Michael Walkley previewed holiday sales trends for Apple. The firm reiterated its Buy rating and $195 price target for Apple shares.

The Thesis

Demand for the iPhone X demand has been very strong, with decreasing lead times suggestive of ramping production, Walkley said in a Sunday note.

The analyst maintained his December quarter iPhone sales estimate of 78.5 million. (See Walkley's track record here.) 

Though Samsung leads the North American market in high-end Android sales, Walkley said the demand for Apple's new products — namely the iPhone 8, iPhone 8 Plus and iPhone X — suggests ongoing share gains through the end of the year.

Canaccord Genuity estimates that Apple accounted for 72 percent of industry profits in the September quarter, up from 68 percent in the June quarter. The firm projects further share gains in the December quarter.

"We believe strong sales and mix fo the iPhone X will sustain strong gross margin dollars given the high price points and likely improving manufacturing efficiencies," Walkley said. 

The iPhone's installed base will exceed 635 million by the end of calendar 2017, according to Canaccord's estimates. 

"This impressive installed base should drive strong iPhone replacement sales and earnings, as well as cash flow generation to fund strong long-term capital returns," the analyst said. 

Canaccord expects a stronger upgrade cycle in calendar year 2018, with ramping supply of the iPhone X driving strong ASPs, margins and earnings.

The Price Action

Apple shares have been up a solid 47 percent year-to-date. 

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Photo courtesy of Apple.