Almost Daily Grant's on : Apple sucking / ridiculous P/E ratio ...........................................
grantspub.com
October 10, 2024
Artificial intelligence remains the ticket in Cupertino, as Apple’s highly anticipated next generation iPhone duly stirred the bull crowd to the tune of a 21.3% third quarter advance (contributing nearly one percentage point to the S&P 500’s 6% total return over that stretch by Bloomberg’s count). Yet consumers have responded to the AI-infused device with a shrug, thus far defying hopes of a pronounced upgrade cycle. “The high expectations for iPhone 16 [and] 17 are premature,” warned analysts at Jefferies Monday. “A lack of material new features and limited AI coverage mean high market expectations of 5% to 10% growth are unlikely to be met.”
The investment bank has company in that opinion, as peers at JPMorgan, Barclays and Citi have each trimmed their respective iPhone unit sales estimates over the past two weeks. Meanwhile, a Piper Sandler survey of teenage consumers found that only 22% of respondents plan to upgrade to the newest iteration, down from 23% and 24%, respectively, anticipating such a switch over the past two years. AI hype and all, that downshift is particularly surprising since “the average iPhone among teens is about three generations behind the iPhone 16, meaning these older models could be due for an upgrade,” Piper notes.
Yet the growing prospect of an iPhone 16 disappointment, in the context of negligible revenue growth over the past three years, has not dislodged shares from virtual all-time highs. Apple commands a princely 34 times consensus earnings estimate, compared to an average price tag of 22 times forward earnings over the past 10 years.
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