Reality Check Looms For Apple iPhone Sales?

Are expectations for iPhone sales, including the newest models yet to bow, realistic?

Maybe not, according to recent news from Deutsche Bank, which released a report on Wednesday (Sept. 27) that reiterated a hold rating on the technology giant, and a $140 price target that is about 9 percent below the current price level.

In the report, Analyst Sherri Scribner said, “We remain wary that investor expectations for the iPhone 8/X cycle are more optimistic than realistic. Expectations are pricing in more than Apple can chew.”

As a result, according to Deutsche, fiscal year 2019 estimates are too high. That sentiment comes after strong iPhone sales cycles seen in the past. Do not expect a repeat, said the analyst, as investors who look for a déjà vu of a successful iPhone upgrade cycle — which as CNBC noted brought in sales that were $31 billion above projections — may be disappointed.

“To beat expectations by a similar magnitude ($30 billion) this cycle would require that AAPL ship 45 million more iPhone units in FY-18 than current expectations, or nearly 290 million iPhones in total. We view this as highly unlikely,” she wrote. In fact, the analyst is looking for a unit decline and Apple fiscal 2019 sales to drop in the wake of the looming iPhone 8 and iPhone X cycles.

As reported earlier this week, Apple has ordered suppliers to deliver 40 percent of the components originally ordered tied to the new phones. There have been reports during the subsequent days that production delays have been caused by issues surrounding the 3D sensors that are to be used in the iPhone X for facial recognition technology, as reported Thursday.

The concerns over the iPhone X production and possibly tepid demand for the iPhone 8 and iPhone 8 Plus that have just come to market have helped to rattle the stock prices of Apple and some of its production partners.