Earlier this year, Wedbush analyst Daniel Ives proclaimed 2018 the year of the iPhone super cycle. Jump forward in time, and he’s lowered his price target on Apple, following the “horror show [of] the last month.”
He’s also convinced that something seriously needs to change with next year’s iPhone: either a big change in price or a major redesign. Is he right?
“We ultimately believe Apple will need to seriously contemplate pricing changes and/or design changes with the next cycle of iPhones slated for the fall of 2019 to drive a surge of upgrade activity that has moved out of FY19 and into FY20,” Ives wrote in a note to investors.
According to Apple analyst Ming-Chi Kuo, Apple is unlikely to significantly change the design of the iPhone in 2019. He says nothing about pricing, but given that Apple recently changed its iPhone reporting metric to average sale price we’re not sure we see that one changing, either.
With iPhone sales flagging, Ives suggests that Apple also needs to “significantly invest” in its Services division over the next 12-18 months. This is necessary if it’s going to show the kind of growth the company would like to see. Ives says that this could be done “through acquisitions,” although there’s no suggestion of which companies Apple would want to acquire.
Overall, he has cut his price target from the optimistic $310 back to $275. At present, Apple is trading at $175.41. That’s up 1.2 percent, although Apple is still down 19 percent since the start of this month.
What a difference six months makes
Ives’ take on Apple isn’t enormously different from other investors who have also cut their price targets on the company. However, it does show how much perception of Apple has changed in the past six months.
In May, Ives predicted that the 2018 iPhone would cause Apple’s long-awaited iPhone super cycle. This, he argued, was because customers the previous year had been put off by the high price point of the iPhone X, and the similarity of the iPhone 8 and iPhone 8 Plus to previous generations of iPhone. Somewhere along the line, this year’s iPhones evidently disappointed him.
Would you rather that Apple went for a major price reduction or a redesign with 2019’s iPhone? And do you expect either one to happen? Let us know your thoughts in the comments below.