iPhone X Looking at Big Manufacturing Rise on Anticipated Upgrade Frenzy

Excitement is building around the upcoming release of iPhone X, as Apple Inc. (NASDAQ:AAPL) celebrates ten years from the launch of its 1st generation iPhone. Though the production of iPhone X will get off to a slow start in September, BlueFin analysts John Donovan and Steve Mullane believe that the tech giant is gearing up for massive demand and will ramp up manufacturing by “record levels [of] tens of millions of units” in 2018 and 2019. The analysts opine that hundreds of millions of Apple users are eagerly awaiting the iPhone X’s superior OLED imaging and will be looking forward to upgrading their two years+ old devices by the middle of next year.

While keeping sources under-wraps, Donovan and Mullane note the company’s plans to build only 5-6 million iPhone X units in fiscal Q4 among 53 million units, while seeing “a rapid run-up in production of X, to perhaps 44 million units in the December-ending Q1, and around 30 million each quarter thereafter.”

The analysts continue, “With forecasted builds of 89M in Q4 and 250M in CY:18 it is clear to us that AAPL is counting on its massive installed base to step up and upgrade to the OLED and 7s models en masse […] The rationale behind this is that the step up to the new OLED design will filter across all offerings in future generation phones with an installed base hurtling towards 800M in the coming year. Additionally, as many as 300-350M of those phones will be over 2 years old by mid-2018 and should provide fertile ground for continued growth […]  contract manufacturers are content to get in as many parts as possible as early as possible in order to satisfy what appears to be an insatiable demand for the OLED phones over the next 12-15 months.”

TipRanks analytics demonstrate AAPL as a Strong Buy. Out of 34 analysts polled by TipRanks in the last 3 months, 26 are bullish and 8 sidelined on Apple stock. With an upside potential of 6%, the stock’s consensus target price stands at $170.43.

Only 20% Were Watching Disney Anyway- Netflix to Move On

Since Disney’s announcement last week that it will be ending its service for distribution agreement with Netflix, Inc. (NASDAQ:NFLX) the debate has been raging how the move will affect the video streaming giant. Disney will be gradually pulling its content from Netflix in order to set up its own exclusive streaming platform for live action and animated movies in 2019. While some analysts have made gloomy predictions, top analyst Michael Olson does not believe the impact will be all that significant. The analyst reached his conclusions by polling Netflix users to discover their preferred content and exploring the company’s content spend.

Olson surveyed 500 Netflix users in the U.S. to see how much time they spend watching Disney content. In his analysis, the analyst found that “Only 20% of subs spend >10% of Netflix time on Disney. We believe essentially none of the other 80% of subs, who spend 10% or less of their time on Netflix watching Disney, will be compelled to cancel due to loss of Disney content. Even within the 20% who spend >10% of their Netflix time on Disney content, we would be surprised if many cancel their subscription, unless a large part (>40%) of their Netflix time is allocated to Disney (which we found to be <5% of Netflix subs in another small survey of 70 subs that we ran.)”

Olson further opines that “Netflix can license similar genre content from other sources and/or use the cost savings for original programming” pointing to the recent acquisition of Millarworld as evidence the company is looking to expand original programming. Moreover, the analyst is confident that the company will continue to expand its budget for original programming from the 20% set aside last year to 50% in the next two to three years. In regard to Disney content spend, Olson estimates that Disney programming only comprises 3% of the annual Netflix content budget at around $200 million and the company is already working out redistribution of funds for its post-Disney future.

The analyst maintains an Overweight rating on NFLX stock with a $215.00 price target representing a 25% lift above current trading levels.

Michael Olson has a very good TipRanks score with a 64% success rate and a high ranking of #64 out of 4,618 analysts. Graham realizes 16.7% in his annual returns. When recommending NFLX, Graham earns 15.3%.

TipRanks analytics demonstrate NFLX as a Buy. Out of 31 analysts polled by TipRanks in the last 3 months, 21 are bullish, 1 bearish with 9 sidelined on Netflix stock. With an upside potential of 13%, the stock’s consensus target price stands at $193.83.