Analyst sees no supercycle for Apple, but predicts strong iPhone X sales
McCourt's note includes some data not favorable to Apple. He says that 37% of iPhone owners plan to upgrade to a 2017 iPhone over the next 12 months. Over the previous three years, that figure has averaged 44%. This tells the analyst that there will be no supercycle. McCourt wrote, "The data suggests that this year's refresh may not drive the proverbial 'supercycle' that many have predicted." In addition, he predicts that 14% of iPhone owners plan to update over the next three months. That compares with 15% who updated over the first 3 months last year, and 17% the year before that. However, with 46% of those upgrading turning to the more expensive iPhone X, Apple's gross profit margin will rise 2 percentage points next year.
The analyst says that the heavier demand he finds for the iPhone X over the iPhone 8 and iPhone 8 Plus is surprising considering the more expensive price for the tenth anniversary model, and "the lack of a killer app" for the phone. Overall, McCourt lowered his forecast of iPhone sales for 2018 to 240 million from 260 million. But with the iPhone X selling like hotcakes, he raised his earnings per share forecast for Apple's 2018 fiscal year from $10.50 to $10.85. He also raised his target for Apple's shares to $180 from $170. The stock is currently trading near $154. Since the September 12th event that introduced the new iPhone models including the iPhone X, Apple has lost $50 million in market capitalization.