$AAPL - NEW STREET ON APPLE: 'WE EXPECT A 10% MISS ON SHIPMENTS'
"iPhone 16 started shipping on Friday. Early datapoints suggest reception is poor, with disappointing innovation, and a late rollout of Apple Intelligence. In today's work, we provide our perspective on the upcoming iPhone cycle. We expect 215m iPhone shipments in FY25, 10% below consensus, with elongating cycles and market share headwinds in China. The stock has been less sensitive to iPhone performance in recent years. We therefore expect only a short-lived pull-back and re-iterate our Neutral rating, with a $225 Target Price (30x FY26 EPS), i.e. a 40% premium to the S&P 500, in line with the average of the last 5 years. Generative AI will still revolutionize the user experience over time, and Apple is well positioned to capture some of the attached value, but it will play on a longer time horizon."
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