Apple's Launch of iPhone SE4 Not Seen Impacting Revenue Guidance, UBS Says

Apple Inc. (NASDAQ: AAPL) is set to unveil its latest budget-friendly smartphone, the iPhone SE4, on February 19th, with availability expected two weeks later. However, UBS analysts do not anticipate this launch to significantly impact Apple's revenue guidance for the March quarter. According to UBS, the iPhone SE4's launch is already factored into Apple's revenue guidance, which anticipates "low to mid-single" digits year-over-year growth.

UBS expects the iPhone SE4 to be the first iPhone to feature an internally designed modem, replacing the component from Qualcomm. The firm's supply chain checks indicate that the SE4's launch is already captured in Apple's revenue guidance for the March quarter. UBS maintains a Neutral rating and a price target of $236 on Apple shares.

The iPhone SE4 is rumored to have a starting price of $499, which is a significant decrease from the iPhone SE3's starting price of $3499 in China, equivalent to approximately $499. This pricing strategy aims to attract a broader range of customers, including those who may not have been able to afford previous iPhone SE models or those who prefer a more budget-friendly option.

Apple's pricing strategy for the iPhone SE4 is expected to have a positive impact on its market share. By offering a more affordable option, Apple can tap into the mid-range smartphone market, which is currently dominated by Android competitors. This could help Apple regain some of the market share it has lost in recent years due to increasing competition and slowing iPhone sales.

In addition to the iPhone SE4's pricing strategy, Apple's services revenue has remained robust, thanks to strong App Store sales and demand for its software offerings. This growth could help limit overall declines in earnings, despite the iPhone sales challenges.

UBS's price target and Neutral rating for Apple shares are driven by several key factors, including iPhone sales and revenue estimates, December quarter revenue and EPS estimates, iPhone revenue decline, services revenue growth, iPhone SE 4 launch, market sentiment, and competition. These factors combined contribute to UBS's price target of $236 and Neutral rating for Apple shares.

In conclusion, Apple's launch of the iPhone SE4 is not expected to significantly impact its revenue guidance for the March quarter, as the launch is already factored into Apple's revenue guidance. The iPhone SE4's pricing strategy is expected to have a positive impact on Apple's market share, as it will make the device more accessible to a broader range of customers. Apple's services revenue growth could also help limit overall declines in earnings. UBS maintains a Neutral rating and a price target of $236 on Apple shares.