Apple stock: UBS sees limited iPhone ASP upside

UBS analysts report mixed demand for Apple's iPhone 17 lineup, with elevated wait times for the entry-level Base model in key markets like the U.S. and China, suggesting strong unit demand and potential upside to builds for base and Air variants. However, demand for higher-end models is relatively muted, leading UBS to caution that this demand mix towards lower-priced models could limit Apple's Average Selling Price (ASP) upside and impact revenue per unit in the Sept-25 quarter, despite implied price increases for Pro models.

Analysis

Early demand signals for Apple's upcoming iPhone 17 lineup present a mixed outlook, according to a UBS analysis of wait time data across 30 geographies. The data reveals strong demand for the entry-level iPhone 17 Base model, with wait times in the U.S. increasing to approximately 18 days versus 11 days for the prior year's model, and surging to 25 days in China from 9 days previously. This suggests a potential for upside to iPhone unit builds, particularly for the Base and Air variants. However, this is counterbalanced by muted demand for the higher-tier models, with the iPhone 17 Pro Max showing wait times of ~25 days, significantly lower than the ~42 days observed for the iPhone 15 Pro Max at a similar point. UBS cautions that this initial demand mix skewed towards the entry-level model could limit Average Selling Price (ASP) upside for the September-25 quarter. The issue is compounded by a pricing strategy that implies a price decrease for the Base model, due to a starting storage increase to 256GB, which could weigh on revenue per unit despite price increases for the Air and Pro models.

Key Decisions for Investors

• Investors should closely monitor the trade-off between potentially higher unit sales, driven by the iPhone 17 Base model, and the risk of compressed Average Selling Prices (ASP) and margins due to the consumer shift away from premium models.
• It is crucial to watch for official company guidance and sales data for the September-25 quarter to validate whether this early, lower-end demand mix persists, as it could temper revenue growth even if unit shipment targets are met.
• Consider the geographic mix of demand, noting that strong interest for the Base model in China may be driven by subsidies, which could be a less sustainable or profitable growth driver than organic demand for high-end products.
• Re-evaluate models that assume significant ASP growth for the iPhone 17 cycle, as the current data points to a potential headwind for revenue-per-unit forecasts.