WASHINGTON: In a research note published today, RBC Capital retained its positive stance on Apple Inc. (NASDAQ:AAPL) after its consumer survey revealed positive data related to the iPhone.
Based on the responses of over 6,400 individuals, the survey outlined that consumer preference is shifting to higher memory models, the iPhone Upgrade program is gaining traction across the user base, and that demand for Apple Watch remains stable.
Elaborating on consumer inclination toward higher memory configurations, RBC analysts said that their survey indicated that 33% of the respondents showed an intent to buy the 16GB model (down from last year’s 40%), 51% planned on purchasing 64GB (up from last year last year’s 48%), and 16% were mulling to buy 128GB (as opposed to last year’s 12%). The analyst added that the move to high-end memory would boost average selling prices (ASPs) as well as gross margins (GMs). They project that Apple could make over 85% in GMs due to the memory shift.
At the official iPhone 6s launch event on September 9, the management unveiled an iPhone Upgrade program whereby users could buy an unlocked iPhone, and pay for it in installments spread over a 24-month period. RBC’s survey shows that 20% of the respondents said that they intend to use the iPhone Upgrade program. The firm estimates that if 20% of the US user base of around 200 million units opts for the program, earnings per share (EPS) would be incremented by around $0.15.
About the Apple Watch, the survey highlighted that roughly 13% (which is up by around 200 bps compared to last survey) of the respondents showed intent to buy the device in 2015. RBC analysts further wrote: “Notably, there is a large undecided component (21% Apple Watch) and if this segment is converted to ‘Yes’ candidates, we would become incrementally more bullish on Apple over the NTM period.”
For the September quarter, RBC projects revenues of $50.1 billion and an EPS of $1.83. The firm is modeling revenues of $81.5 billion and an EPS of $3.47 for the December quarter. RBC’s fiscal year 2016 (FY16) revenue and EPS expectations are $245.8 billion and $10, respectively. With regard to iPhone shipments, RBC forecasts September quarter units of 45.2 million, December quarter units of 78.2 million, and FY16 units of 236.3 million.
