Analysts Expect Rollout Of New iPhones At Apple's 'Gather Round' Event Wednesday

Sell-side analysts are anticipating the introduction of three new iPhone models at Apple, Inc. APPL’s “Gather Round” event Wednesday in Cupertino. Here's what analysts from Bank of America Merrill Lynch, Goldman Sachs and UBS have to say ahead of the reveal.  

The Analysts

• Bank of America analyst Wamsi Mohan maintained a Buy rating on Apple with a $250 price target.
• Goldman Sachs analyst Rod Hall maintained a Neutral rating and raised the price target from $200 to $240.
• UBS analyst Timothy Arcuri reiterated a Buy rating and raised the price target from $215 to $250.

Products

Each analyst expects the reveal of three new iPhones; including the rumored models commonly referred to as the iPhone 9, the iPhone XS and the iPhone XS Plus.

Goldman's Hall said he “wouldn’t be surprised” by a refresh of the Mac Mini and Apple Watches, despite the products’ insignificant impact on earnings projections. 

BofA's Mohan said the three new phones are expected to feature an upgraded processor, as well as FaceID and wireless charging. “The new phones may ship with a faster 18W USB-C charger. One or more SKUs of the new iPhones may support dual SIM cards. Another possibility is for the new iPhones to get support for the Apple pencil. iOS 12 will see various enhancements,” the analyst said. 

Apple could also launch an updated iPad Pro, a new MacBook or an Apple HomePod mini at the event, Mohan said. 

Pricing

While each analyst suggested a more fairly priced group of iPhones than in the past, each firm provided a range of average selling price points.

BofA expects an iPhone XS Plus at $1,049, an iPhone XS at $999 and a new LCD option, the iPhone 9, at $799, with all prices being for the smallest memory configurations.

Goldman expects an iPhone 9 at $848, well above the consensus of $699-$749, Hall said. A $699 price point is unlikely, as it would likely bode poorly for earnings per share data, the analyst said. In the event of a $699 price, the average selling price would decline by 13 percent, while earnings per share would decline by 8 percent, falling below the Bloomberg consensus, he said.

UBS assumes base model prices of $699 for the iPhone 9, $969 for the iPhone XS and $1,060 for the iPhone XS Plus.

Goldman anticipates the launch of two new AppleCare plans, at $219 and $179 price points, in conjunction with the updated phones. 

Stock

Apple stock usually does well going into launch events, rising as much as 10 percent, said BofA's Mohan. 

While shares may drop slightly after the event, Mohan said he expects overall positive price performance on the basis of anticipated iPhone rollouts.

“If perceived higher pricing is interpreted as a negative post-event and the shares pull back, we would see that as a particularly attractive opportunity to buy the stock," the analyst said. 

UBS said Apple is trading at 15.4 times the company’s 2019 earnings per share estimate.

“The stock remains under-owned. In our view, investors are not pricing in the potential benefit of a recurring model and future growth from newer markets,” Arcuri said.

The “Gather Round” event is scheduled for 1 p.m. EST Wednesday. The company has confirmed a Twitter, Inc. TWTR livestream of the event, according to MacRumors. 

Price Action

Apple shares were up 2.22 percent at $223.18 at the time of publication Tuesday. 

Related Links

Canaccord Raises Apple Price Target Ahead Of iPhone Event

What To Expect From Apple's Sept. 12 'Gather Round' Event

Photo by Daniel Lu/Wikimedia.