Nomura Cautious On 5G Impact For Apple, Trims iPhone Demand Estimates

The excited vision of the 5G future may be clouding assessment of the near-term reality for Apple Inc. AAPL and upcoming iPhone sales, Nomura Instinet said Thursday as it trimmed estimates on smartphone sales and 2020 earnings.

The Analyst

Nomura Instinet’s Jeffrey Kvaal remained Neutral on Apple and kept his $185 price target on the stock, but trimmed earnings estimates for Fiscal 2020 from $12.98 to $12.55, below the Street consensus.

The Thesis

Investors are looking ahead to 2020 5G iPhone launches with excitement — maybe too much excitement, he believes — cautioning that first-quarter sales estimates for the new generation phones may be overly optimistic.

“The shape of the 5G cycle remains uncertain,” Kvaal wrote in a note.

Kvaal said Nomura now models iPhone units/ASPs of 186 million/$745, compared to the Wall Street consensus of 186 million/$749.

Apple’s strong fourth-quarter guidance also included some one-time tailwinds, he said, including refill help from China and the wait for new model launches slipping into October. And then, there seems to be less enthusiasm about the new iPhone itself.

“Our U.S. and China checks indicate demand remains hushed,” he wrote. “We do not expect this year’s new phones to materially alter this pattern, as the camera seems the largest meaningful improvement.”

Price Action

Investors didn't appear convinced of Kvaal's position on Thursday morning, with Apple's stock trading up 1.2% at $208.12.

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