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Will Apple (AAPL) iPhone Unit Sales Disappoint in 2018?

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Per Steven Milunovich, an analyst with UBS, Apple Inc’s (AAPL - Free Report) iPhone unit sales in 2018 could be lower than expected, given the “flat” buying intent in many countries, reports Investor’s Business Daily. However, revenues are likely to be cushioned by higher average selling price of premium iPhone models (iPhone X).

Subsequently, he slashed his iPhone unit sales growth estimate to 10% from 12% projected earlier. However, he has retained the “Buy” rating on the stock.

Investor’s Business Daily quoted the analyst saying, “Phone buying intent vs. a year ago for the next 12 months is flat in the U.S. and Japan and down in the U.K., China and Germany. If the survey is correct regarding more muted near-term unit growth, the Apple narrative could shift toward monetizing the large iPhone base."

Apple Inc. Revenue (TTM)

Apple Inc. Revenue (TTM) | Apple Inc. Quote

There has been tremendous excitement surrounding iPhone X. It is widely considered to be a super cycle. The sale of this edition is expected to be boosted xby features like a glass body, a dual curved edge-to-edge OLED (organic light-emitting diode) display with wireless charging (USB-C), higher storage options and a far superior camera.

There are also speculations that robust iPhone X sales will make Apple the first company to touch the $1 trillion valuation mark. Currently, Apple’s market cap is nearly $894 billion. Its shares have increased about 50.3% year over year and hit a 52-week high of $176.24. Shares are currently trading at $174.09.

Per a recent report by GBH Insights analyst Daniel Ives, as quoted by Investor’s Business Daily, iPhone X cycle could help Apple reach the milestone figure as early as next year.

Apart from iPhone X, the analyst adds that the fast booming Services business and the rebound witnessed in China could propel Apple to new highs. A cash pile of $250 billion could help Apple make strategic acquisitions (Netflix, Walt Disney,Tesla and the rumors go on) and carry on with its gigantic shareholder return plan.

iPhone continues to be the mainstay of Apple’s revenues. The revolutionary iPhone, released in June 2007, changed the world forever and catapulted Apple to new highs. The success of iPhone over the last decade is well chronicled.

Reportedly, Apple has sold over 1.2 billion iPhones across the globe, earning over $760 billion in revenues.

Since the first iPhone release, Apple shares have skyrocketed compared with the industry to which it belongs. Over the last decade, Apple stock has returned 898.6% while the industry witnessed a rally of 424.9%.

At present, Apple carries a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked stocks in the broader technology sector include Groupon Inc (GRPN - Free Report) , Activision Blizzard and HP Inc (HPQ - Free Report) . While Groupon sports a Zacks Rank #1 (Strong Buy), Activision Blizzard and HP carry a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Groupon, Activision and HP is currently projected to be 10%, 13.8% and 4.4%, respectively. 

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