“We think an $870 price would be accretive to earnings per share but dilutive to gross margin, a dynamic Apple has said it would accept,†UBS noted. Samsung’s new Galaxy S8 is priced at $720 and its larger-screened Galaxy S8+ counterpart costs $840.
Apple’s upcoming anniversary edition iPhone 8 is unlikely to cost $1,000 as has been speculated, with new models expected to see a “bulge of buying,” UBS said in a note on Tuesday as it upgraded its outlook on the U.S. technology giant’s earnings.
UBS said it now expects Apple’s earnings per share (EPS) for fiscal 2018 – which begins in the December quarter of 2017 – to be $10.55, up from its previous estimate of $10.25. The iPhone average selling price (ASP) is likely to be $692, up from a prior estimate of $667, the investment bank added.
Here’s an excerpt from Milunovich’s research note:
Offsetting this display size differential is the fact that iPhone 8 could have features not included in Galaxy S8+, such as a front facing 3D sensing camera, embedded fingerprint sensor and higher quality facial recognition.
“Apple customers seem fine with paying more for products they feel are differentiated,†he added. Case in point: iPhone 7 Plus, which “has had more demand than any other Plus model released†thanks to the dual camera.
Based on a higher-priced iPhone 8 and a boosted upgrade cycle, the investment bank predicted that iPhone’s average selling price is likely to be $692, up from a prior estimate of $667. UBS now expects the company’s earnings per share for fiscal 2018 to be $10.55, up from its previous estimate of $10.25.
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