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Apple's (AAPL) iPhone X Records Robust Black Friday Sales

Zacks Equity Research

We have always maintained that the power of Apple Inc.’s AAPL loyal customer base should not be underestimated.

StreetInsider has cited a recent report by Rosenblatt China Technology wherein analyst Jun Zhnag said that Apple sold 6 million units of the pricey iPhone X model over the Black Friday weekend alone. Since its launch, iPhone X has sold over 15 million units, added the report.

Moreover, the demand for 256 GB iPhone X, priced at $1,150, was double that of the 64 GB model that costs $1K. The hefty price tag was a concern for many analysts but it seems that is it not going to be a deterrent for consumers.  iPhone X production is also ramping up with 3 million units per week produced currently and is expected to increase by another one million by December, per the report.

Apple Inc. Revenue (TTM)

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

Apple’s radically overhauled iPhone X was anticipated to be a super cycle and it seems like it is turning into one. Apple is expected to sell a whopping 30 million iPhone X units this quarter, per Rosenblatt. However, for the March quarter, the analyst has reduced unit sale estimates by 5 million to 40 million.

Apple releases its new models in September and the December quarter usually sees high sale activity. In the year-ago period, Apple sold 45.5 million units of iPhone. However, reportedly, it looks like Apple is set to witness a record breaking quarter wherein it is expected to sell 80 million iPhone units.

For the current quarter, Apple expects sales to be in the range of $84 to $87 billion compared with $78.4 billion reported in fiscal first-quarter 2017. Higher average selling price should significantly contribute to this. The Zacks Consensus Estimate is pegged at $85.8 billion.

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 $870 billion. Its shares have increased about 46.3% year over year and hit a 52-week high of $176.24. Shares are currently trading at $169.48.

Per a recent report by GBH Insights analyst Daniel Ives, as quoted by Investor’s Business Daily, the 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 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.

Apple carries a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Better-ranked stocks in the broader technology sector include Groupon Inc GRPN, Activision Blizzard ATVI and HP Inc HPQ. While Groupon sports a Zacks Rank #1 (Strong Buy), Activision Blizzard and HP carry a Zacks Rank #2 (Buy).

Long-term earnings growth rate for Groupon, Activision and HP is currently projected to be 10%, 13.8% and 5.3%, respectively.

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