Earnings

Apple's Latest iPhones To Boost Momentum, Produce Upside

Bank of America Merrill Lynch was pounding the table on Apple Tuesday (Oct. 9), predicting the iPhone maker will see increased momentum thanks to the launch of its latest round of mobile devices.

According to a report in CNBC, citing a research note that Bank of America Merrill Lynch issued to clients, a global survey of smartphone users concluded there is strong enough demand that Apple could report earnings that beat expectations next year. Bank of America Merrill Lynch reiterated its buy rating on the stock and its price target of $256 a share, which implies 14 percent upside to where the stock was Monday (Oct. 8).

“Our survey suggests interest in upgrading to an iPhone rose significantly in recent months, with steady growth following the announcements of the iPhone XS and iPhone XR,” analyst Wamsi Mohan said. Based on the survey of close to 91,000 consumers from March to September, the Wall Street firm found that 33 percent of survey respondents plan to upgrade to an iPhone, while only 15 percent said they would upgrade to a Samsung device. What’s more, 70 percent of iPhone owners plan to remain with Apple when they are in the market for a new device.

“iPhone users’ stickiness is better than the competition,” Mohan said. “Our survey points to a significant opportunity for growth in both China and India.” The analyst expects Apple to weigh in with 2019 earnings per share (EPS) of $14.41, which is higher than the consensus, which stands at $13.62, noted the report.

In early September, Apple released three phones, as expected, which watchers had been anticipating. There was the expected release of the two next generation X phones, iPhone XS and the iPhone XS Max, both of which leverage OLED capacity. And, in the interest of “bringing [its] technology to as many people as possible,” Apple also unveiled the iPhone XR, which uses an LCD screen instead of an OLED. Apple said the XR is designed to offer the iPhone X experience on an LCD device, right down to things like haptic touch and face ID.

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