Lead times for the Apple iPhone 16 are shorter than the iPhone 15. An analyst says there may be more to the picture as investors and analysts question weaker demand concerns.
The Apple Analyst: Goldman Sachs analyst Michael Ng reiterated a Buy rating on Apple Inc AAPL with a $276 price target.
The Analyst Takeaways: Delivery lead times for the iPhone 16 are shorter than the iPhone 15 based on channel inventory, the analyst said in a recent note.
"Although shorter lead times could imply weaker demand trends, lead times provide an incomplete picture of demand when viewed without an accurate view of channel inventory," Ng said.
The analyst said inventory ahead of Friday's iPhone 16 launch was "particularly lean," which could be one of the biggest factors in the shorter lead times.
Positive commentary on iPhone 16 demand from T-Mobile should also be a factor for investors to consider, the analyst added.
"We continue to believe AAPL should benefit from a step-up in earnings power, catalyzed by a multi-year iPhone upgrade cycle.
Lead times for the iPhone 16 were tracked by the analyst from Sept. 13 to Sept. 19 across regions like the U.S., China, Japan, UK, India and Hong Kong.
While lead times for the iPhone 16 are lower for all models and tracked regions compared to the iPhone 15, the more expensive Pro and Pro Max models have extended lead times compared to the base and Plus models. The larger lead times could suggest customers are focusing on "premiumization" with an iPhone upgrade.
The iPhone 16 Pro and Pro Max have a more powerful chip and larger display screen size, Ng said.
The bad news could be that while the lead time for the more expensive models is longer, the lead time is shorter compared to the iPhone 15 Pro and Pro Max by 11 days and 19 days respectively.
"Lower lead times across models and regions for the 16 series versus the 15 series during pre-order periods could suggest lower unit purchases, though we recognize lead times could also be a reflection of company supply."
AAPL Price Action: Apple stock trades at $228.82 on Monday, versus a 52-week trading range of $164.08 to $237.23. Apple stock is up 23% year-to-date in 2024.
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