Bernstein Raises Apple (AAPL) FY18 ASPs 7%

Bernstein analyst Toni Sacconaghi raised FY18 estimates on Apple (NASDAQ: AAPL) after exploring iPhone ASPs.

Based on the product mix numbers from their recent survey of 1100 iPhone users, their model points to an ASP for iPhones of $773 in FY 18, or $786 including the positive benefit from currency. This is largely driven by the mix of iPhone X but also aided by expected richer storage configurations, price increases on iPhone 8 and 8+, and currency.

Amid this, Sacconaghi conservatively raised FY18 ASPs from $702 to $753 (consensus at $717), revenue estimate from $264.0B to $276.8B (consensus at $263.5B), and EPS estimate from $11.05 to $11.75 (consensus at $10.99).

The analyst notes that every $10 increase in ASP boosts FY 18 revenue and EPS estimates by $2.5B and $0.14 respectively.

Sacconaghi continues to see risk-reward as attractive for 3 reasons: (1) Consensus' view of FY 18 appears to be too conservative, and AAPLstock has outperformed in iPhone cycles that exceeded investor expectations, (2) AAPL trades comfortably below its peak relative multiple from its last iPhone super-cycle (at a similar multiple, AAPL would trade at $197 on our FY18 estimates); & (3) the potential contribution from currency and other products (HomePod, Watch 3) may be material.

The firm maintained an Outperform rating and price target of $175.

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $156.17 yesterday.

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