Submitted by Fred Straker on
Last week may have been a short trading week, however it was jam packed with fresh Apple (NASDAQ:AAPL) news for stockholders. Apple stock opened Monday at $106.54 and dropped over a dollar after the iPhone SE media event as analysts digested the news. AAPL then surged on Tuesday, and hit its peak for the trading week at $107.28.
Share prices slid on Thursday, bottoming out at $104.95 before recovering to close the week at $105.67. After a loss of $0.87 (-0.82%) last week, AAPL started an upward climb on Tuesday morning. So what does Wall Street think of the lower-priced iPhone SE?
Wall Street reacts to the iPhone SE
Kulbinder Garcha at Credit Suisse is targeting a $140 share price, and boosting 2016 EPS estimates to $9.29 thanks to the new Apple hardware. Credit Suisse described the iPhone SE as a "solid move for the iPhone business," projecting 18 million units sold in 2016.Deutsche Bank described the iPhone SE event as "in line with expectations," however they did find one surprise. Analyst Sherri Scribner pointed to lower iPhone SE pricing as a "modest positive". Joining this view was Citi, which believes the reduced starting price on the iPhone SE signals Apple's strategy to increase market share in emerging economies such as India and the rest of APAC.
Goldman Sachs also believes the iPhone SE will boost sales in emerging markets, driving 150 million new customers to Apple over three years. The $399 pricing could "could drive better demand elasticity for the SE" compared to original sales forecasts of 12 million units.
Newest iPhone FAQs
JPMorgan says the iPhone SE opens a "substantial iPhone market opportunity". Analyst Rod Hall floated these numbers: 17 million units, $6.9B new revenue, $2.8B in profits, and EPS increases of $0.43/share. This projection is bullish at +4.6% over the consensus EPS of $9.09.
Katy Huberty at Morgan Stanley believes the lower entry pricing on iPhone SE and Apple Watch will attract new customers. She also notes that the iPhone SE shares components with the iPhone 6s and shares manufacturing tools with the iPhone 5s, which is advantageous to Apple.
Pacific Crest did not change its estimates in response to the iPhone SE. In fact, they expect iPhone SE sales volume to be relatively low, which means the impact on overall profitability "is likely to be moderate."
Dividend increase coming in April
Apple is expected to increase its dividend by 8-11 percent next month. The dividend was reinstated starting in mid-2012, and currently stands at $0.52. This represents an increase of 11% per year, since the current dividend program started at $0.38. Apple has large cash holdings, steady cash flow and has experienced large EPS increases year-over-year. Typically, the company announces dividend increases during its April quarterly report.