Apple iPhone 14 Pro Adoption is "A Bit Stronger" Than Expected - Morgan Stanley

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By Sam Boughedda

A Morgan Stanley analyst said in a note Wednesday that early iPhone 14 lead times are starting off stronger than expected.

The analyst, who has an Overweight rating and $180 price target on Apple (NASDAQ:AAPL) shares, explained that iPhone 14 Pro Max lead times are the longest of any model in the last six years at this point in the cycle, while pre-order data from China is also better than feared.

"The key investor debate entering last week's iPhone launch event was how resilient iPhone 14 demand will be in the face of persistent inflation and growing macro uncertainty, both of which are proving to be headwinds to consumer electronics spending intentions," the analyst wrote. "However, early iPhone 14 Pro/Pro Max lead times in the U.S. are stronger than expected, with our proprietary lead time tracker showing iPhone 14 Pro Max lead times are the longest of any model in the last 6 years at this point in the cycle, and iPhone 14 Pro lead times the 3rd longest of any model in the last 6 years (in-line with iPhone 13 Pro/Pro Max last year). Early pre-order commentary from markets such as China and India is similarly robust."

Morgan Stanley also stated that early iPhone 14 Pro/Pro Max adoption is "a bit stronger" than it expected, which it believes is evidence of Apple's strategy of high-end model differentiation paying off.

This could "act as a potential incremental tailwind to iPhone ASPs in FY23, where we are already 5% ahead of consensus at $900," the analyst stated.

"Overall, these data points show strong early iPhone 14 demand is not just isolated to the U.S. – however, we await early demand data points from Europe and Japan to gauge how pre-order demand is trending in regions where iPhone prices have increased more materially in local currency," he concluded.