Apple's Latest Product Showcase: A Mixed Bag with Upside Potential

Strategic Insights -

Apple's latest product lineup, led by the iPhone 17 range, offers a mix of incremental improvements and quiet price shifts. While the price increases, particularly the scrapping of the 128 GB storage tier, may alarm some, Goldman Sachs believes it will support average selling price growth and premiumization. The bank remains a buyer of the stock with a $266 price target, implying 13.5% upside from the current $234.35. The new devices also bring upgrades to the wearables line-up and AirPods Pro 3.

Key Takeaways:

  • The iPhone 17 range, including a thinner "Air" model, comes with incremental improvements such as larger displays, upgraded cameras, and new processors.
  • The base iPhone 17 starts at $799, with the Pro and Air models starting at $999 and $1,099 respectively, with the Pro Max priced at $1,999 for the 2 TB option.
  • The wearables line-up has been refreshed with extended battery life and health features, while the SE 3 adopts the newer chip and Always On display at a lower price point.
  • AirPods Pro 3 bring stronger noise cancellation, better fit and live translation, which at launch covers five languages with more to follow.
  • Carrier promotions remain generous, with trade-in credits of up to $1,100 available from US networks.
  • Goldman models revenue rising from $391 billion in the 2024 fiscal year to $480 billion by 2027, with earnings per share climbing from $6.75 to $9.04.
  • Services are expected to contribute the bulk of profit growth, marking an "inflexion point" in the investment case as Apple becomes more of a recurring-revenue story.
  • The bank's valuation is based on Apple's vast user base, with over a billion active iPhones, and the company's ability to maintain a loyal customer base through hardware and services upgrades.

Statistics:

  • The new iPhone 17 range starts at $799, a $100 increase from the previous entry-level model.
  • The Pro and Air models start at $999 and $1,099 respectively, with the Pro Max priced at $1,999 for the 2 TB option.
  • Carrier trade-in credits of up to $1,100 are available from US networks.
  • Goldman models revenue rising to $480 billion by 2027.
  • Earnings per share are expected to climb to $9.04 by 2027.

Sources:

  • Apple Inc
  • Goldman Sachs
  • Bloomberg (Reporter - noted access link)