Canaccord Genuity and Piper Jaffray Believe iPhones Hanging Tough In Face Of New Smartphones

Mar 5 2014, 1:26pm CST | by

Canaccord Genuity and Piper Jaffray Believe iPhones Hanging Tough In Face Of New Smartphones
Photo Credit: Forbes Business

Canaccord Genuity’s Apple analyst Michael Walkley’s survey shows that the iPhone 5s has been the best selling smartphone at the four major U.S. carriers from October to February and believes that iPhone’s can gain market share in the second half of 2014 when larger screen ones become available. Piper Jaffray’s Apple analyst Gene Munster surveyed 1,003 people about their smartphone purchase intentions and found that the 5s has decreased slightly from 38% post launch to 33% in February. (Note that my family and I own Apple shares and that I have sold put options, a bullish position). 

Canaccord Genuity’s Walkley had a number of meetings at the Mobile World Conference in Barcelona and his read is another confirmation that the high-end smartphone market is maturing from a feature perspective (along with lower unit growth rates especially in the developed countries). He projects that Apple’s iPhone could gain share in the second half of 2014 when it releases a larger screen iPhone due to customer loyalty and non-compelling features from Android smartphones. I personally have an iPhone 5 and am waiting for a larger screen one with Touch ID and plan to wait until my two years are up in September.

He also tracks the top three selling iPhones at AT&T, Verizon, Sprint and T-Mobile. The iPhone 5s has maintained the number one position at all four carriers from October through February while the 5c has fallen from the number three position in October and November to not being in the top three in at least January and February. The Samsung Galaxy S4 and Note 3 have been in the number 2 and 3 positions for the past two months, respectively.

Walkley raised his EPS estimate slightly for fiscal 2014 from $42.86 to $42.92 but significantly raised his fiscal 2015 projection from $47.56 to $49.96 based on higher iPhone unit estimates. This increased his price target from $570 to $600.

Source: Canaccord Genuity

Piper Jaffray’s Gene Munster surveyed just over 1,000 people on their next three month buying intention for smartphones. The main takeaway from the survey is that the iPhone 5s seems to be hanging in pretty well with its buying intentions decreasing from 38% right after it was launched in September to 33% in February.

One the flip side the 5c has moved from 12% of people planning on buying it to 6%. While overall the 5c has been additive to Apple’s results I believe almost everyone would agree, except Apple’s management publicly, that it has been a disappointment given its lower sales than expected.

Munster is projecting 37.5 million iPhones for the March quarter which would be flat from the March 2013 quarter and up 3% when adjusted for inventory changes. It would be down 25% from the December quarter, again adjusted for inventory changes vs. last year when they declined 21%. While China Mobile and NTT DoCoMo will help the March quarter results they have to make up for China Telecom and Unicom which launched the iPhone 5 in the March 2013 quarter but released the 5s in 2013.

Munster’s fiscal 2014 and 2015 EPS estimates are $43.23 and $43.54, respectively, and has a $640 price target.

Follow me on Twitter @sandhillinsight. You can find my other Forbes posts here.

Source: Forbes Business


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