Apple Inc. ($AAPL) is witnessing a decline in year-over-year demand for its new iPhone models, particularly the high-end variants, following the commencement of pre-orders, as outlined in a recent analysis by UBS Securities communicated via email on Wednesday. According to UBS, average wait times for the iPhone 16 Pro Max across major markets including the US, China, Germany, Great Britain, France, and Japan are approximately two weeks shorter than the previous year's figures.
For the Pro model, wait times are on average eight days shorter than those of last year's version. In the United States, the Pro Max model is experiencing wait times of around 26 days compared to 40 days last year, despite the anticipation of new artificial intelligence features set to be integrated into the lineup later this year.
UBS analysts David Vogt and Andrew Spinola pointed out that in China, where both macroeconomic and competitive dynamics are impacting consumer behavior, the wait times are about half of those seen in 2023. The analysts emphasized that analyzing year-over-year comparisons offers valuable insights into genuine demand, stating, "we believe (year-over-year) comparisons are more meaningful in determining underlying demand, where wait times for the iPhone 16 lineup have been uninspiring since preorders began last Friday." Reflecting a cautious stance, UBS reiterated a neutral rating with a price target of $236 for Apple stock.
The brokerage’s fiscal fourth-quarter earnings per share target stands at $1.58, which is slightly below the consensus forecast of $1.60, and the fiscal 2024 EPS estimate is projected at a penny under the Street's expectation of $6.69. In midday trading, Apple's shares rose by 1.8%. Looking ahead, UBS projects that iPhone 16 production in the latter half of 2024 could increase by 10% year-over-year, amounting to 86 million units, up from 78 million units of iPhone 15 manufactured the prior year.
However, the initial wait-time data indicates a potential downside risk to these production figures, as noted by analysts Vogt and Spinola. They warned that the lackluster demand for luxury versions, namely the iPhone Pro and Pro Max, which represent approximately 65% of total iPhone builds for the latter half of the year, could restrict the growth of average selling prices.
Meanwhile, the base and Plus versions of the iPhone show wait times that are largely consistent with last year's metrics. According to UBS, these models account for 35% of the initial build rates for the new lineup..