What Apple Analysts Are Saying About New iPhones, Early Demand Trends

Apple, Inc. AAPL announced a new iPhone iteration, among other products, at its fall event Tuesday. Apple's shares, however, have not received much lift from the product unveiling.

Here's what the sell side has to say. 

Sustainability Key In Second Year of 5G Era, Credit Suisse Says: The launch event played out largely in line with expectations, bringing more incremental changes to the lineup, Credit Suisse analyst Matthew Cabral said. This is as opposed to the step-function improvement seen last year with the addition of 5G, the analyst said. 

Aggressive carrier promotions out of the gate remain a potential swing factor in helping to stimulate demand, he said. 

"More broadly, sustainability remains a key debate for the stock as we head into the 2nd year of the 5G era." 

History suggests a meaningful slowdown in year two of major cycles, Cabral said. 

The analyst sees the unit momentum fading as last year's pent-up demand from more tech-savvy early adopters gives way to a more mainstream buyer base focused on a normalized replacement cycle.

Additionally, ASPs could potentially flip to a headwind as more mainstream 5G adoption pushes the mix back down following last year's outsized Pro/Pro Max strength, Cabral said.

Related Link: Why Apple Is A 'Top Tech Name' To Own Right Now

Why Morgan Stanley Expects Higher ASPs, Promotion-induced Unit Strength: From the perspective of the feature set and pricing, the launch event was in line with expectations, Morgan Stanley analyst Katy Huberty said.

Some of the surprises include a 1-TB iPhone model and new iPads, the analyst said.

Despite the relatively unchanged like-for-like iPhone pricing compared to the iPhone 12, the introduction of higher end iPhone storage SKUs is likely to drive year-over-year Phone ASP growth, she said. 

At the same time, higher iPhone trade-in values and more aggressive carrier promotions make the iPhone 13 more affordable for consumers, Huberty said. 

"When combined with iPhone replacement cycles that remain elongated, 5% 5G adoption within the iPhone installed base, fully reopened retail stores, and elevated iPhone backlog entering FY22, we remain bullish on the prospects for iPhone growth in FY22." 

The analyst sees potential for upside relative to Morgan Stanley's iPhone ASP forecast.

If early reports on demand trends indicate elevated iPhone demand vs. low buy-side expectations, Apple shares will likely outperform in the near-term, in Morgan Stanley's view. 

Needham's Key Takeaways From Apple Launch Event: Apple's focus is on its ecosystem interdependence between new use cases and hardware upgrades, Needham analyst Laura Martin said.

The company's marketing strategy appears to be the use of upgraded hardware features to target and collect new passionate niche audiences through software, the analyst said.

Apple is expanding its "anchor tenant" use cases to entice new loyal long-term customers into its ecosystem and then upsells them other products and services, she said. 

"Since many AAPL services are well ahead of competitors, it is difficult for these fandoms to leave the iPhone ecosystem." 

Apple's bundle of integrated products and services is among the most economically valuable, and the focus on collecting global fandoms lowers churn, lowers its customer acquisition costs and raises its printing power, Martin said. 

RayJay Optimistic On Apple's Units, Mix: The most important takeaway from the event was that U.S. carrier subsidies appear even more aggressive than last year, providing incremental optimism regarding units and mix, Raymond James analyst Chris Caso said.

The main incremental features for this iPhone generation, the analyst said, were greater battery life and improved cameras — features that have resonated best with consumers.

Memory loading was increased for the lower end iPhone 13 and 13 Mini models, though higher end memory loading was unchanged, he said. 

The next important event will be watching preorder sales and product availability, Caso said. Preorders begin this Friday, with all models scheduled to be available Sept. 24, according to RayJay. 

Related Link: Apple Charts Big Plans For Apple TV+, Including Taking On Netflix, Disney+ and Amazon Prime

Apple Ratings, Price Targets: Credit Suisse has a Neutral rating and $150 price target for Apple shares.

Morgan Stanley maintained an Overweight rating and $168 price target.

Needham rates Apple shares a Buy and $170 price target.

RayJay maintained an Outperform rating and $168 price target.

AAPL Price Action: Apple shares gained 0.61% Wednesday, closing at $149.03.