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Why Deutsche Bank Is Cautious about Apple

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iPhone 8 figures too optimistic: Deutsche Bank

Germany-based (EWG) investment company Deutsche Bank (DB) is treading a different path regarding Apple’s (AAPL) iPhone 8 estimates. Deutsche Bank believes that the upcoming iPhone supercycle may be overestimated and that iPhone sales in fiscal 2018 could be lower than expected.

In a research note, a Deutsche Bank analyst stated that the factors that were at play leading up to the launch of the iPhone 6 and 6 Plus in 2015 won’t be repeated this year. The bank further stated that 2015 was the real supercycle due to Apple’s transition to a larger screen size and its partnership with telecommunications giant China Mobile (CHL).

An iPhone supercycle marks a rise in demand for iPhones after a fall in full-year revenue, as we saw in the company’s fiscal 2016.

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Will users upgrade to the iPhone 8?

According to Deutsche Bank, lower carrier subsidies in 2017 have meant an increase in the average iPhone refresh cycle. The bank claims that the average refresh cycle for an iPhone is 2.7 years. As we’ve learned, Deutsche Bank also expects the new iPhone to cost more than $1000, which is likely to negatively affect demand. The research report states, “Generally, when prices go up, demand goes down. A scenario where prices go up and demand goes up seems highly unlikely in our view.”

Analysts expect iPhone shipments to reach 244 million units in fiscal 2018, compared to Deutsche Bank’s estimate of 230 million units. In fiscal 2015, Apple shipped 231 million iPhones driven by the successful launch of the iPhone 6. JPMorgan Chase (JPM) analyst Rod Hall expects iPhone sales to reach 260 million in fiscal 2018.

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