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18/07/24
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Apple’s FY25 ‘Super-Cycle’ For iPhones Doubtful – UBS
In a research note on Apple Inc from UBS analysts predict the tech giant will deliver as expected in June and September, but cautioned that the market’s optimism for FY25 may be too optimistic.
UBS forecasts revenues for June 2024 at $84.6B, a 3.5% increase year-on-year, with iPhone unit sales likely to hit 43M million, a drop of 2% year-on-year. UBS also expects that Mac sales will benefit from easy comparisons, pushing their forecast up to $7.5B.
They also predict that revenue from iPads for the quarter will grow by 10% year-on-year.
UBS doubts that iPhones will hit a “super-cycle” in 2025 despite these predictions and argues that their analysis of smartphone demand by previous cycles, region, carrier subsidies, and income demographic data suggests the cycle next year will be more modest.
UBS also believes that unless EPS estimates increase substantially, the risk/reward is not favorable, given Apple’s current price-to-earnings multiple of 33X.
Despite adjusting their estimates slightly, UBS maintains that iPhone demand expectations for 2025 are too optimistic. They predict that peak demand for iPhones will hit about 247M units, substantially lower than most bullish investors’ forecasts.
UBS also said that markets were pricing iPhone units at 15% higher than their 225M forecast for 2025.
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