Apple (AAPL): Near Term Upside Likely – Nomura

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Nomura/Instinet analyst, Jeffrey Kvaal, reiterated his Buy rating on shares of Apple (NASDAQ: AAPL) and reiterated his price target of $185 after holiday weekend work uncovered positive data points that suggest iPhone X demand can fuel upside to near-term estimates. However, he hedges the bullish data points with the caveat that the stock has traditionally traded poorly between Supercycles.

Key demand points include:

-the dearth of X promos in the U.S. as surprising though positive for AAPL. TMUS noted that the X has seen great demand and better supply than anticipated. Both TMUS and VZ expect X demand to spill into March.

-SensorTower analysis reveals unique app downloads in the week post-X launch were 2% above the 8 launch,
~45% above the 7 launch, and ~30% above the 6/6s launch.

-Supply chain constraints began to ease in very late October; initial shipment times were 5-6 weeks. Apple may be able to ship 30-35mn X units in F1Q.

-The analyst’s work indicates the high-end model is particularly popular – suggests 1Q ASPs could reach ~$750. This would translate to FY18E EPS of $11.95. Our FY18E EPS of $11.75 assumes 265mn iPhones (consensus $11.42, 242mn).

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