Investor, media, and consumer reaction to the iPhone 7 initially proved to be stronger than expected, with new features like an upgraded camera, new colors and better battery life helping boost initial sales. While many assumed there would be a lull ahead of the holiday shopping season, that hasn't happened for the iPhone 7.
As a result, there may be big things for Apple (AAPL) shares going forward.
Drexel Hamilton analyst Brian White, who rates Apple a Buy with a $185 price target, noted that the third quarter has been stronger than usual for his proprietary Apple Monitor index. There's also been a positive reception to the iPhone 7 in China. Combine all of that with the Galaxy Note 7 disaster Samsung is currently experiencing, the stars are aligning for Apple over the next few quarters.
Many analysts weren't expecting big things from the iPhone 7, with expectations that the 2017 version of the iPhone would be the big reason to upgrade -- not so anymore. "We believe the iPhone 7/7 Plus can return Apple to iPhone unit growth in 2Q:FY17 and full year FY:17," White wrote in a note to clients.
Other analysts are saying the same thing about the iPhone, from which Apple derives nearly two-thirds of its quarterly revenue. Goldman Sachs analyst Simona Jankowski reiterated her buy rating ahead of Apple's earnings report on Oct. 25, expecting "a solid beat-and-raise quarter," aided by an additional 1 million iPhone units sold.
The iPhone 7, and particularly the iPhone 7 Plus, has been aided by the return of Jet Black (along with a stainless steel Apple logo) as a color, in addition to black, gold, silver and rose gold. Jet Black, even though it smudges easily and may have some scratches, has proven to be extremely popular, with a wait time on Apple's website showing between 3 and 5 weeks. It seems as if Jet Black is a return to the iPhone as a status symbol, when fewer people had it, which may be helping its popularity.
The iPhone 7 Plus has proven to be just as popular and may offer a look into Apple's future as well.
The iPhone 7 Plus basically has a 3D camera, showing real-time deep depth preview on screens, optical zoom at one or two times with a button and ten times via software. Andreessen Horowitz analyst Ben Evans postulated Apple may be getting closer to virtual reality with this latest advancement.
Apple shares have run considerably over the past month, gaining 11.5%, compared to a less than 1% gain in the broader Nasdaq.
With the iPhone showing no signs of slowing down as we get closer to the December quarter -- Apple's most important -- shares seem likely to keep moving higher, providing investors with a good opportunity.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
