UBS technology analyst Steven Milunovich says there’s a distinct pattern in how Apple’s stock price reacts to these product launches.
“Based on the last five iPhone announcements, the stock has a reasonably consistent pattern: down in the two weeks preceding the event; up/down 1-2% the day of the event; up between the event and launch (phone availability about two weeks later); weak in the two weeks post launch; and then up going into earnings,” he wrote in a note out Tuesday morning.
“We think there is somewhat greater near-term downside risk this time though we expect the stock to outperform over the next 6-12 months.”
Here’s how the stock has moved before, during, and after previous iPhone announcements, relative to the S&P 500:
Despite the near-term downside risk, UBS maintains its buy rating on Apple’s stock, with a price target of $US180. That’s 12.5% higher than shares were trading Tuesday morning ahead of the announcement. Wall Street analysts have an average price target of $US176, according to Bloomberg.
Specifics of the new iPhone have been hotly speculated ahead of Tuesday’s event.
Some analysts expect the new phone to spark a “supercycle” of upgrades. Many iPhone owners are still sporting an older model and didn’t upgrade to the iPhone 7 that was released last year. The iPhone X, as it’s expected to be called, will have a new bezel-less OLED screen, which would be the first major design change since the launch of the larger iPhone 6.
The new model may also be priced well above previous iPhone versions, which could help earnings, according to Milunovich. “We expect OLED (iPhone X) entry pricing may be lower at $US900 than some think or at most $US1,000,” he wrote. “It is easier to argue for higher earnings with a higher ASP though we think this overlooks the potential negative demand effect of a high price.”
Apple is also expected to announce an update to its Apple Watch and Apple TV, but UBS doesn’t expect much impact from those products “unless there are surprises.”
The announcements will take place in the brand new Steve Jobs Theatre, located at Apple’s new spaceship-like campus. It will be the first time the new headquarters will be open to the general public.
Apple shares are up 40.24% this year, but the company was trading down slightly at midday Tuesday ahead of the event.
To watch Apple’s stock price trade live during the event, which is scheduled to start at 1 p.m. Eastern Time (10 a.m. Pacific), click here.
You can watch the full program live online today on Apple’s website, but make sure you are using either Safari on MacOS devices or Microsoft Edge if on Windows.
Business Insider’s tech correspondent Steve Kovach is on the ground in California and live-tweeting the day’s events as they happen. Make sure to follow Business Insider’s live blog during the event.
There are other stocks to watch today, too. Apple is known for being a master of the supply chain, and sources its parts from multiple manufacturers to ensure it is getting reliable parts at the best price.
Here are the companies to watch as Apple announces the new phone today, each listed with the parts they could be supplying for the new phones.
- Toshiba, SK Hynix and Western Digital: Flash memory providers
- Samsung : Memory and single provider of the iPhone X’s new OLED screen
- Imagination Technologies Group: Graphics technology
- Finisar : 3D sensor lasers that could be used in the rear of the phone
- Lumentum : 3D sensor that could power the facial recognition technology
- Read a breakdown of what each company could be supplying here.
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