Apple Inc. (NASDAQ:AAPL) has had an Outperform rating reiterated with a price target of $150 by RBC Capital’s Amit Daryanani, noting that the iPhone cycle is seeing surprising strength. The conclusion from the analyst is based on the consumer survey on the purchase habits, and on data from the supply chain.
Upgrade cycle strong for Apple
Based on the consumer survey, the analyst notes that Apple is ranked higher than Samsung in terms of loyalty with 83% of the iPhone users plan to stay with the brand for their next purchase compared to 64% for the Korean firm. Also, 4% of the Apple users have plan to switch to Samsung while 10% of Samsung users plan to go for an Apple device. The analyst found that 13% of Apple and 26% of Samsung users are divided or have other options.
Also, the analyst found that carrier contracts are vital in pushing the upgrades as almost 90% of the users are clear on when they will be buying their next smartphone.
It’s clear that Apple is gaining users from those “Switchers” coming over from Android. The firm will include a “Move to iOS” app in iOS 9 that will help those wanting to make that change and may have a marginal effect on increasing the numbers of people coming over from Samsung, and their happiness levels when they do.
Back in January Tim Cook told Wall Street analysts that “The current iPhone line-up experienced the highest Android switcher rate in any of the last three launches in the three previous years.” So far it seems he’s right.
“This leads us to belief that carrier contracts are still the dominant driver when it comes to buying a new smartphone,” said analyst. The analyst found that 50% of the users, who plan to buy an iPhone, will buy one within a year, suggesting that the iPhone cycle will remain positive for the firm.
For the June quarter, the analysts raised their revenue estimate to $49.3bn and EPS of $1.78 (from $47.3bn and $1.69). The analyst expects Apple to sell 46.5m iPhone compared to their earlier estimate of 42.9m units.
Strong iPhone demand
Also, Citi‘s Jim Suva reiterated a Buy on Apple with a price target of $145. Citing supply chain data, Suva raised the June-quarter estimate for the iPhone from 49m to 46m units. That number represents a 39% increase over sales in the same period of 2014.
“Our global supplier checks suggest iPhone demand remains healthy globally given solid underlying build and sell through,” said Suva, expecting China momentum to continue for Apple on the back of expanding retail presence, and rise in the usage of LTE. Suva noted macro factors are mixed, and expect the foreign currency impact to be “less negative” than expected as the US dollar strength “has stalled recently.”
On Monday, Apple shares closed down 1.75% at $124.53, and year to date the stock is up almost 11%. Apple will reveal its earnings numbers for the three months through June on July 21 after the market closes.
Update 10:34 EST: Added paragraphs on “Switchers” and Apple’s new iOS9 app that will help with any transition from Android to the firm’s mobile platform.