- "We continue to believe comps in FY16 will be quite difficult, while early reviews on Apple Watch suggest it will fall far short of the 'insanely great' benchmark, at least in this first iteration," writes Raymond James' Tavis McCourt, downgrading Apple (AAPL +0.1%) to Market Perform.
- McCourt, who has a $124 target, is nonetheless upping his FY15/FY16 estimates. He notes "data points suggest iPhone demand remained strong y/y through March, especially in China, and is now starting to enter its normal seasonal slowdown in calendar 2Q."
- Regarding Apple Watch, McCourt states a March survey of iPhone users found only 5% intending to buy one, down from nearly 10% in December. "[W]e are concerned that relatively muted reviews so far could place added fear in investors’ minds about the company’s ability to launch successful new product categories." His call comes two days after SocGen downgraded to Hold.
- While McCourt downgrades, Canaccord's Mike Walkley has upped his target by $5 to $150, following positive survey data. "While our recent surveys indicated strong initial interest for the new Samsung Galaxy S6 smartphones could slow iPhone premium tier share gains during the June quarter, our March surveys indicated another strong quarter of market share gains for Apple." Cantor reported seeing strong March iPhone supplier sales on Tuesday.
- Walkley forecasts "the iPhone 6 upgrade cycle will result in the installed iPhone base reaching 500M during C2015," and sees 20M 2015 Watch sales (4% of the iPhone base).
- Meanwhile, following the start of Apple Watch pre-orders today, U.S. shipping times for most models have slipped to either "4-6 weeks" or "June." The official launch date for Watch sales is April 24.
- It isn't clear to what extent the shipping push-outs stem from strong demand vs. limited supplies. Cowen and others have previously reported of Watch supply constraints.
- Update: Piper's Gene Munster: "We believe that the current stable lead times suggests that supply was the main limiting factor in this morning’s sell out ... Given the quick sell-out, it seems less likely that Apple will be able to deliver 1 million units of stock on opening weekend, although we still believe there could be 1 million units of demand by April 24th sold via pre-order."