Apple's 'Wonderlust' event draws mixed reviews
Shahid Jamil/iStock Editorial via Getty Images
Appleâs (NASDAQ:AAPL) nearly 90-minute âWonderlustâ event brought mixed reviews from analysts.
The biggest surprise was the fact that the device maker did not raise U.S. prices, despite expectations to the contrary.
âOne striking exception is that despite a weaker yuan, which would point to Apple potentially raising prices, Apple retained its prices in China, possibly reflecting concerns about a weaker consumer and rising political backlash,â Bernstein, which has a Market Perform rating on the stock, wrote in a note.
But Credit Suisse, which has an Outperform rating on the stock, says recent media reports regarding Chinese government prohibitions on iPhones in the office are overblown, noting that the rules have been in place since 2017.
Apple (AAPL) on Tuesday unveiled the next generation of Apple Watch that doesnât require touching the screen to operate, as well as the new iPhone 15 lineup. The Apple Watch Series 9 with silicon was redesigned on the inside with a new S9 chip. Series 9 includes "double tap," using fingers to operate the watch without actually touching the screen.
The new iPhone 15, which comes in two different sizes, includes the âDynamic Island,â an interface that was exclusive to the iPhone 14 Pro and Pro Max and lets users see alerts at the top of the screen.
The company spent a lengthy amount of time boasting about its environmental actions including presenting a skit featuring actress Octavia Spencer as Mother Nature.
Pricing
Citi, which has a Buy on the shares, noted that the unchanged pricing âcould help lift units in a tough macro environment.â
âWe maintain our investment thesis that Apple is more focused on maximizing gross profit per unit of iPhone from migration to premium phones as favorable commodity prices on iPhone storage and iCloud related services will likely help offset flat pricing,â Citi said.
UBS, however, had a different view. Prices were lifted for Pro models by $100. The firm estimated that 40% to 50% of iPhone sold after launch are Pro models, which could result in a 4% to 5% revenue tailwind, however, because of a softer environment and rising component costs, margins could be squeezed.
UBS, which has a Neutral rating on AAPL, noted that sell-through data has been trending below its 49M forecast suggesting September quarter units of 47M.
âAlthough our F2023 EPS is largely unchanged, we reduce our F2024/25/26 EPS by 2% on average to reflect lower ASP on iPhone and a modest headwind to iPhone units in China,â UBS said.
Bernstein said margin implications for the iPhone 15 versus the 14 model are âtougher to gage and are predicated largely on Pro mix.â The firm modeled phone sales flat in 2024, below the consensus of 5% growth, citing uncertainty in the consumer spending environment, lack of compelling new iPhone functionality and âcontinued digestion from strong iPhone 11/12 cycles.â
Canaccord was more positive on the event.
âThe company met investor expectations and has a strong lineup to deliver healthy holiday sales,â Canacord said. âApple is well positioned to benefit from the 5G upgrade cycle, and we anticipate solid overall growth trends as 5G smartphones ramp and its installed base expands with higher- margin services revenue.â
âLonger term, we expect the higher-margin services revenue growth to outpace total company growth and drive gross margin expansion,â Canaccord, which has a Buy rating on the stock, said.
âWith its strong balance sheet, management plans to continue to repurchase shares given the attractive valuation and plans to get to cash neutral longer term. With strong ongoing sales to a loyal customer base and a continued mix shift toward high-margin services, we reiterate our BUY rating and $205 PT.â
Keybanc, which has an Overweight on shares, saw the event as âa modest negative for AAPL given a lack of expected price increase for the Pro model, features that lack a compelling motivation for consumers to upgrade, and modestly less aggressive promotions from carriers.â

More on Apple

Seeking Alphaâs Quant Rating on Apple
Historical earnings data for Apple
Dividend scorecard for Apple
Financial information for Apple
Apple: Be Careful Not To Overpay For It
Apple Stock: China Woes Are Just The Tip Of The Iceberg
Apple: Trouble In Paradise Or Undeserved FUD?
Apple's Stickiness Is Stronger Than Huawei's Competition
Apple's new products -- photos
China flags security issues with Apple's iPhones - report
Apple unveils watch operated by finger movements, iPhone 15, titanium casing
Apple unlikely to feel much heat from China ban: Citi