Shares of Apple (AAPL) are up $3.03, or 0.7%, at $433.61, following a quartet of notes defending the shares this morning.
Three out of the four observers press the case that Apple will return to a prior tradition of unveiling a new iPhone during the summer months rather than the fall, in contrast to others this week who were shifting the time frame till later in the year, such as Barclays's Ben Reitzes did on Wednesday.
Credit Suisse's Kulbinder Garcha reiterates an Outperform rating and a $600 price target, writing that he recently had a call with Apple CFO Peter Oppenheimer, who sounded “confident, yet realistic,” and that Garcha came away with the impression “there are several longer term growth drivers that exist for Apple.”
Garcha thinks there's room for the company to increase its presence in China, which is now $23 billion of sales for Apple despite only 11 stores in the country. Apple is also opening stores in 15 new countries this year, and expanding in Brazil and Russia, and extending financing to make its wares more affordable.
Garcha thinks the high end of the smartphone for the iPhone is not as saturated as people think:
Quoting IDC data the company noted that 45% of smartphones are now above the $400 price point; while growth may be stronger at the low end, the company still believes the high end of the smartphone market will grow. Management noted Apple's ecosystem and lower churn will help drive iPhone platform growth. This fits with our own thesis initially discussed in Smartphones – High-end going higher that the high-end of the smartphone market is growing to unprecedented levels.
There was no update on cash distribution, but ” if Apple decides to distribute its “excess $26bn” onshore cash to shareholders in 3 years, they can boost dividend yield to 4% in 2013.”
Abhey Lamba with Mizuho Securities USA reiterated a Buy rating and a $575 price target, writing that a new iPhone model might come by mid-year:
Our checks reaffirm our view that Apple is preparing to refresh its iPhone lineup earlier this year than last year. While shipments in the March quarter are expected to experience a significant sequential drop, we expect a new version of iPhone in the June-July time frame. For the March quarter, our checks are currently indicating that the company is likely to deliver total phone units in the 35-40M range, which is in-line with current consensus. For the June quarter, shipments will depend on the timing of the product refresh.
Lamba also thinks that a larger-screen iPhone won't happen this year but that a less-expensive version might.
Adds Lamba, “we expect the company to announce a material growth in its quarterly dividend and a significant increase in its share buyback authorization over the next few weeks.”
Raymond James's Tavis McCourt reiterates an Outperform rating and a $600 price target, concurring that an “iPhone 5S” may come earlier, probably in Q3:
A number of component suppliers to Apple have recently indicated an expectation of earlier seasonality this year than last year, both in terms of sluggish orders near term and expectation of growth after a springtime lull. This appears consistent with at least one new iPhone model (we are presuming iPhone 5S branding) earlier in calendar 3Q this year than the late September launch of the iPhone 5 last year. This should cause much lower iPhone shipments in calendar 2Q and higher shipments in calendar 3Q.
McCourt also thinks the market is wrongly predicting iPhone share of the market to be lower than the Mac's share of PCs:
We estimate that Apple�s Mac product line garners ~10% unit share and 25% revenue share of the consumer PC market even without any application/ecosystem advantage. For iPhone revenue to cease growing at today�s level, one would have to assume that Apple�s ultimate unit/revenue share in the smartphone market will simply match the Mac product lines despite massive application ecosystem advantages. We believe the reasonable bet remains that Apple can continue to grow the iPhone business from current levels.
McCourt adjusted his estimates, writing that the June quarter will be less bountiful given that there may be some holding off by customers if they think there's an iPhone refresh around the corner. He cut his revenue estimate this year to $180.96 billion from $183.4 billion, and raising his EPS estimate to $43.91 from $43.64,
Also today, Wedge Partners's Brian Blair offers what his checks seem to suggest for a July debut:
We understand Foxconn is currently prepping production lines for the start of iPhone 5S production, which we believe is scheduled to begin in the April timeframe. As we recently wrote, we believe Apple is deviating from the September/ October iPhone launch period of the last couple of years and returning to a summer launch period, as it followed for the first several iterations of the iPhone. We expect initial component procurement will begin in April, with manufacturing and related orders ramping in May and June. In addition to Foxconn handling the bulk of the manufacturing, we believe Pegatron will also be manufacturing some iPhone 5S units [�] The reasons behind the tightening of the window are unclear, but we believe that competitive pressure and perhaps an attempt to speed up the iPhone 6 launch window in 2014 may be part of the equation. The Samsung Galaxy S4 will be announced next week and will receive considerable global attention for the next several months- if Apple were to wait until October to do anything on the iPhone side, it might feel �late.� [�] We expect the new iPhone 5S to be announced at Apple's World Wide Developer Conference (WWDC) with availability shortly after, likely in the July timeframe. We believe the iPhone 5S will carry the same hardware as the iPhone 5, in keeping with prior iPhone 'S' models, which have offered a spec bump with identical casing since the iPhone 3G. We expect a faster CPU, likely the A6X chip currently used in the iPad. We also believe that Apple will be enhancing the touch screen. One potential variable for the 5S is a move to a 13 MP camera sensor, as this is becoming key feature at the high end this year. While we�d like to see a larger screen version of the iPhone, an iPhone Plus edition, to address obvious consumer demand for larger screened Smartphones, we have yet to see evidence of it in the supply chain.
And there may be a price cut to the iPhone 5 and 4S, but “One thing that is less certain is whether or not the company will opt to keep the iPhone 4 on the production line and sell it in the sub $300 range.”
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