4.7-Inch iPhone 6 'Seems Certain', 5.5-Inch 'May or May Not Launch at the Same Time'

The rumored 4.7-inch iPhone 6 "seems certain" for an August or September launch; however, the rumored 5.5-inch model "may or may not launch at the same time", according to UBS analyst Steve Milunovich. He also suggests that the 5.5-inch device "could be of the same resolution (lower pip), which would help app developers."

Notably, in a recent appearance on CNBC‘s “Smart money: Half Time Report” Milunovich said in passing that his checks suggest the larger iPhone models could conceivably be priced higher than current models.

Barrons relays Milunovich's prediction that the March and June quarters may be weaker than expected for Apple, while Q3 could prove better:

In the near term, we believe 1Q procurement, though not fully correlated to sell-in, is coming down a bit. In phones, the primary difference likely is the 5c, which has not sold well. Overall volumes are reflecting a maturing high-end smartphone market. iPad volumes appear to be lower than expected—recall that Dec quarter sell-through was only up 5% YoY. General tablet production is soft with some components down 20- 50% sequentially. We model iPad units declining to 19mn in Mar and 16mn in June. We are below consensus for Mar/Jun quarter revenue; no change in Apple estimates. 

Apple’s stock has been fairly listless but is still in an uptrend. Our price target of $625 per share is based on a NTM EV/FCF multiple of 9.5x, in-line with other large cap tech names. The stock may act better this summer in anticipation of new products. We expect a dividend hike and share repurchase guidance on the April earnings call. Our iPhone model is up just 10mn this year at 172mn vs 162mn last year. China Mobile, which appears to be off to a slow start at about 1mn iPhones in Feb, could be sufficient to account for the entire change. The second calendar half may surprise to the upside if either China Mobile or the iPhone 6 gain traction. Although the iPhone 6 could carry a lower margin since we would be surprised if it is priced at much of a premium, unit demand could be strong as surveys suggest Apple users want larger screen sizes and carriers’ 24-month enforced contracts roll off for 4s owners.

More details in the full report linked below...

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