American Investment Bank Vedbush analyst Daniel Avis (Daniel
Ives) released a report on Monday that Apple can and should cut the price on the iPhone in China.from
Avis writes in a report: "We expect the iPhone in the coming months.
Reduced prices for XR (the newest new mobile phone for Apple) will be even bigger. Apple faces serious problems in China, and around the iPhone
The right pricing strategy for XR and other future iPhone models will be key. "
Online Store Apple (China)
Apple stocks declined by 1.50% on Monday to $ 150 per share. The broader market has also declined, with the heavy Nasdaq oil price down 0.94%.
Avis expects the target price of Apple to be $ 200. He said that the drop in iPhone prices in China "is the key to supporting analysts of their bull market theory." Apple should "sell its products at a lower price." .
Avis said Apple's iPhone should have two main reasons for lowering prices in China. First, the smartphone market in China is highly competitive. Avis said: "Because of the competition with the low cost of Huawei and Xiaomi, Apple must make sure it will not lose existing iPhone users in the next few quarters."
Second, consumers ultimately need an iPhone to realize all the benefits of Apple's revenue growth. Avis writes: "Reducing prices is a reasonable and necessary strategy for Apple, because it is a well-formed foundation. The growth of core services in the next 10 years will be based on this premise." The data in the Chinese market shows that this decline in prices has started to emerge. "
According to analysts, China is not only one of the most profitable regions of Apple, according to Weddbush estimates, about 20% of all iPhone users are upgraded from China. About 350 million iPhone users will be upgraded in the near future, of which 60-70 million users are now in China.
Earlier this month, Apple announced that revenue in the December quarter would be about $ 8 billion less than expected to shock the market. Last week it was reported that due to weak demand, the company asked suppliers to reduce the production of the iPhone by 10%.
In recent years, Apple's revenue growth has actually slowed down. Analyst at Morgan Stanley, Katie Huberti, said in a report last week that revenues from Apple's services grew by 18.3% year on year in the fourth quarter of last year, up from 25% in September. .
In the end, this may be due to the slowdown in iPhone sales. Huberti wrote: "The slowdown in service business growth is temporary in nature, mainly due to AppleCare, which was affected by a 19% annual drop in iPhone sales in December."
Analysts at RBC Capital Markets wrote in their report on Monday that they also expect Apple's revenues to increase by 18% in December, well below the planned Wall Street 27%.
Huberti expects Apple's target price to be $ 211 for the next 12 months, based on a 20% annual growth rate in services. Avis estimates a target price of $ 200, which is 24%, based on an increase of 17% in services up to 2020. Since 2019, Apple's share price has dropped by almost 5%.