Shrinking wait times for Apple Inc (NASDAQ:AAPL, ETR:APC)'s new iPhone 16 Pro and Pro Max is “increasingly concerning” as it points to muted demand, analysts at UBS believe.
Wait times are far shorter than for the iPhone 15 lineup released last year, even factoring in supply chain distortions in 2023, analysts highlighted.
In the US, the wait time for the iPhone 16 Pro Max is 24 days compared to 42 days for the 15 Pro Max, while there is a 19-day wait for the 16 Pro model, compared to 30 days for the 15 Pro.
“Utilizing wait times in the US, the largest smartphone market as a proxy for change in demand over the past seven days highlights that high-end devices are more readily available than anytime since the launch of the first 5G-enabled iPhone in 2020,” analysts observed.
“In addition, in the prior four launches, wait time for the Pro Max increased post-launch, unlike the continued decline in the 16 Pro Max to about 24 days.”
In China, the iPhone 16 Max wait time is 18 days compared to 39 for the 15 Pro Max, and 9 days for the 16 Plus down from 11 days for the 15 Plus.
“Typically, at this point in the launch cycle, wait times at the high-end have ticked higher sequentially as demand remained somewhat stable,” the UBS analysts wrote.
“However, wait times in the US for the high-end 16s (Pro and Pro Max) did not notably tick higher like the wait times for the high-end 14 and 15s.”
The lack of Apple’s AI offering Apple Intelligence is likely one of the factors weighing on near-term consumer demand, analysts believe.
“The stable launch of AI is not expected until mid-October concurrent with the launch of iOS 18.1,” they wrote.
“Furthermore, iOS18.1 is not expected to include Genmoji, Image Playground and other features like ChatGPT integration. Therefore, demand is likely to remain muted until the expected launch of iOS 18.2 in early November.”
As such, the analysts do not expect iPhone upside for the September quarter. Their checks indicate that, with roughly a week left in the September quarter, at best an in-line iPhone quarter from both a unit and revenue perspective.
They forecast 51 million iPhone units, below the 51.7 million consensus, up about 4% from 49 million in the year-ago quarter.
Factoring in a slightly better mix to the Pro and Pro Max, they project iPhone revenue of $45.7 billion, up 4.4% year-over-year and in line with the consensus.
“Furthermore, if demand does not improve, the 6% iPhone revenue growth embedded in the consensus for the December quarter (with the market greater than 6%) is at risk in our view,” they wrote.
The analysts awarded ‘Neutral’-rated Apple a $236 price target. Shares of Apple traded hands at $225.80 in the early afternoon on Wednesday.