One big question for investors in Apple and its suppliers is whether the new iPhone 8 models, which launched Friday, are selling well — or whether Apple fans and customers are holding out for the high-end iPhone X, which launches in November.
Short lines at Apple Stores and other retailers last week suggested that the iPhone 8 launch may have been a dud.
But one highly respected analyst is telling investors to relax. The KGI Securities analyst Ming-Chi Kuo wrote on Wednesday in a research note seen by Business Insider that iPhone 8 first-weekend sales were "stable, not weak," and that the "market may be excessively negative on iPhone 8 first-weekend sales."
KGI Securities thinks Apple's Asian factories are building about the same number of iPhone 8s as they are the more expensive iPhone 8 Pluses, for a total of 16 million to 18 million iPhone 8 models this quarter.
The report relies on data from Localytics to suggest the more-expensive iPhone 8 Plus is slightly more popular so far.
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Kuo writes that most analysts tend to look for signals from retailers for first-weekend sales, like people camping out outside Apple Stores ahead of a product launch. But those sales are typically for unlocked devices, not the iPhones sold on installment plans by carriers and other retailers.
"While we acknowledge that queues outside SIM-free channels have been much shorter than after previous iPhone launches, we see stable first-weekend demand for the iPhone 8/8 Plus in carrier channels," the note said. "Most of those camping outside unlocked-device outlets are presumably hardcore Apple fans and heavy users, whose plan this year is to gear up for the iPhone X."
KGI's "Apple Insight" notes target investors in companies that count Apple as a customer — companies like Foxconn's parent, Hon Hai, which assembles iPhones, as well as those that manufacture the complicated components that go into them.
Kuo's takeaway from early iPhone 8 sales? "Apple supply chain shares have corrected because the market is excessively negative on iPhone 8/8 Plus first-weekend sales," he wrote. He recommends investing in companies such as Hon Hai, Largan Precision, and Chunghwa Precision in Taiwan.
But he says his findings don't "imply iPhone 8/8 Plus shipment momentum will remain stable."
"We believe this needs to be monitored closely going forwards," he wrote.
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