Apple Inc. unveiled the most anticipated new iPhone in years on Tuesday, and with the tech giant’s shares already up 40% in 2017, the device had to live up to high expectations.
CEO Tim Cook and other executives took to the stage at Apple’s new campus in Cupertino, California, to show off multiple iPhones — including the 5.8-inch edge-to-edge iPhone X, which retails starting at $999 — an LTE-enabled Watch, and an upgraded Apple TV streaming video box.
While the company’s shares finished down 0.4% after the presentations ended, Wall Street remains mostly optimistic. Here’s a wrap of what analysts are saying.
Michael Olson of Piper Jaffray
“This being the 10th anniversary of the original iPhone, expectations were for the company to deliver a device with a relatively more robust set of upgraded features. We believe Apple generally met these lofty expectations. Most notably, we would point to the change in form factor (edge-to-edge, glass OLED screen) and 3-D sensing (enabling facial recognition) as the key upgrades.
“We recommend owning Apple due to potential for a strong iPhone upgrade cycle and a favorable trajectory for services revenue.” Maintained overweight rating and $190 price target.
Brian White of Drexel Hamilton
“Apple’s stock will not only benefit from the upcoming iPhone cycle, but also the company’s capital distribution initiative, attractive valuation and potential new innovations. As such, we do not believe Apple’s run will end with today’s iPhone event, but still has attractive upside potential.” Maintained buy rating with $208 price target.
Gene Munster of Loup Ventures
“The iPhone X has advanced 3-D sensing, display, camera, and augmented reality technologies that have never been available in consumer devices. These technologies solidify the platform on which Apple will retain and grow its user base for the next decade. … We were hoping to see advanced AR sensors on both the front and the rear of the new device, but the new, advanced sensors are primarily relegated to the iPhone X’s front.
“IPhone X will ship on November 3, roughly six weeks after we had previously expected,” he said. “The ship date likely won’t have a material impact on the number of units sold, but will push some unit sales into the March quarter.”
Amit Daryanani of RBC Capital Markets
“This year’s event marked one of the most highly anticipated product announcements in recent years, and from a product perspective, the company did not disappoint. We think the new form factor and net new features/capabilities (wireless charging, AR enablement, 3-D sensing) added to the flagship device will drive accelerated device upgrades within Apple’s install base combined with increased switching activity.
“Fundamentally, we think the excitement surrounding the new form factor/features will drive increased unit demand in addition to mix shift toward the higher-end device ($999), which should enable one of the strongest iPhone cycles in recent years.”
Abbey Lmaba of Mizuho Securities USA
“Alongside the iPhone announcements, the event also included updates around the Watch (now cellular enabled) and Apple TV which, in our view, are also incremental in nature. Overall, with consensus calling for iPhone unit/average selling price growth of 14% and 6%, respectively, for fiscal year 2018, we see limited upside to estimates.
“Further, with the stock trading at around 15 times fiscal year 2018 consensus earnings per share estimates, we think valuation fully reflects robust expectations.”
Wamsi Mohan of Bank of America Merrill Lynch
“The feature set of the phones was impressive but largely in-line with expectations with a later shipment date for the iPhone X. iPhone X is priced starting at $999 (64GB) and $1149 (256GB), which could test the relatively inelastic pricing that Apple has experienced in the past.
“We are taking a moderately more cautious view on units (cutting roughly 10 million units of the high end phone) but average selling price increase leads to a net higher revenue and earnings per share estimate.” Keeps buy rating and $180 price target.
By Julie Verhage and Jeran Wittenstein