China will be key to the success of the launch of Apple Inc (NASDAQ:AAPL)'s latest iPhone, the iPhone 15, which is releasing on Tuesday next week, according to analysts at Wedbush.
“On the recent China news over the last few days, we believe, in a worst-case scenario, any China government agency iPhone ban is way overblown. To quantify, it's less than 500,000 iPhones of roughly 45 million we expect to be sold in China over the next 12 months,” the analysts wrote in a note to clients.
“We believe, despite the loud noise, Apple has seen massive share gains in the China smartphone market as we estimate Cupertino has gained roughly 300 basis points of market share in the key China market over the last 18 months with iPhone 15 giving Apple incremental momentum on this front.”
The analysts expect iPhone 15 unit sales of about 85 million out of the gate in Asia, which is roughly flat with their year-ago number from the iPhone 14 launch.
“We also expect a heavy iPhone Pro mix shift for iPhone 15 in a 75%/25% base model versus the historical 60%/40% seen over the past few years in a major average selling price tailwind for [Apple CEO Tim] Cook & Co. especially out of China in a very heavy Pro/Max model mix,” they wrote.
Further, the analysts believe that the star of the iPhone 15 launch will be the iPhone 15 Pro Max having a periscope telephoto lens that significantly boosts the optical zoom capability, allowing for 5x to 6x optical zoom versus 3x with the iPhone 14 Pro.
A price increase of $100 for the iPhone 15 Pro and iPhone 15 Pro Max model is expected, the first price increase in years, they added.
“We believe now is the time to increase iPhone prices modestly as while Apple will keep the base model prices unchanged the enhanced technology, chips, and battery technology in iPhone 15 Pro/Max warrants this strategic pricing move from Apple,” they wrote.
“Importantly we expect some massive discounts/promotions from U.S. carriers over the coming months which should further catalyze iPhone 15 sales out of the gates and take the sting of a slight price increase away.”
As such, they reiterated their $230 price target and ‘Outperform’ rating for Apple stock.
Apple shares traded at $178.66 on Friday afternoon.
Contact the author at emily.jarvie@proactiveinvestors.com
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