BofA Analyst Issues Positive Note Ahead of “Far Out” Event

02 SEPTEMBER 2022 - New iPhones expected, have you heard? BofA analyst Wamsi Mohan has. Both Apple 3.0 and Yahoo! Finance have Mr. Mohan putting on his thinking cap where the iPhone 14 line is concerned. Apple is expected to announce that at next Wednesday’s “Far Out” media event, along with new models of Apple Watch and who knows what else? Also, who cares what else? As far as many are concerned, the event and Apple itself are all about iPhone.

As far as Mr. Mohan is concerned, next week’s event isn’t even about iPhone, but about how much the next iPhones will cost. “In our opinion,” says the analyst’s note, “iPhone pricing is the main focus item for investors followed by timing and cadence of the launch and any news on pricing/bundling.” Seriously - barely a mention of the hardware, except to say “new hardware.”

On “timing and cadence,” if iPhone 14 launches on 16 September (two Fridays after the “Far Out” event), “there would be 9 ship days in F4Q22 for the new phones…” That’s better than the two-days iPhone 13 got, according to the analyst, and more normal for iPhone releases. On “pricing,” Mohan thinks the consumer end will keep the same starting price this year as last, while Pro phones could start a few bucks higher. Quoting his note:

…with an inflationary backdrop, Apple could choose to increase the price of the Pro models (high end consumer less sensitive to price) and leave the lower end models unchanged. If Apple were to raise pro-model prices by $50, we est. a $0.20 EPS tailwind.

I said earlier that all analysts care about is iPhone, where Apple is concerned, and that all Mr. Mohan cares about is the price. I was just being glib. Not only did Mohan use Thursday’s note to reiterate is “Buy” rating on Apple shares, he also listed several reasons why he’s a fan. They include (but are not limited to):

• Great expectations for iPhone upgrades in FY2023, “driven by the need for higher connectivity which will enable new AR/VR applications…”

• “Higher growth in services revenues”

• “Continuing strong capital returns”

• Ans expectations that Apple shares will “outperform in a broader market down cycle”

He’s got a “Buy” rating on the shares, as I say. His price target on the shares is $185.