Consumer electronics giant Apple is likely to introduce a lower-cost 5G iPhone at a spring product launch event, analysts say. The rumored iPhone SE 3 would kick off a slew of product refreshes this year, and could be a catalyst for Apple stock.
The third-generation iPhone SE might provide a lift to Apple's smartphone sales, especially in emerging markets like China.
Apple hasn't upgraded its entry-level iPhone SE handset in two years. The current 4G model starts at $399, vs. $599 for Apple's cheapest 5G smartphone, the iPhone 12 Mini. Apple's second-generation 5G smartphones, the iPhone 13 series, start at $699.
Loop Capital Markets analyst John Donovan said he's heard rumors that the new iPhone SE could start at $300. Donovan rates Apple stock as buy.
Wedbush Securities analyst Daniel Ives thinks Apple will stick with the $399 starting price, but wouldn't rule out a lower price.
"Apple needs to make sure that it doesn't outprice itself in the midst of the strongest iPhone upgrade cycle it's had since 2015," Ives told Investor's Business Daily. Ives rates Apple stock as outperform with a price target of 200. Apple stock ended the regular session on Thursday at 162.74.
New iPhone SE Likely A Modest Upgrade
The iPhone SE 3 is likely to be a modest upgrade to the current model, Donovan said in a recent note to clients. It addition to 5G wireless capability, it is expected to sport a newer processor —possibly Apple's current A15 chip — along with an improved camera, Donovan said.
JPMorgan analysts in December predicted that the new iPhone could spur a wave of switchers from Android smartphones. It has the potential to lure some of the nearly 1.4 billion users of low to midrange Android phones and about 300 million users of older model iPhones, the investment bank said in a report to clients.
Apple's chief smartphone rival, Samsung Electronics, introduced its latest Android handsets, the Galaxy S22 series, on Feb. 9. Samsung was the top smartphone vendor worldwide in 2021 with 20.1% market share, followed by Apple with 17.4%, according to research firm IDC. Chinese Android phone makers Xiaomi, Oppo and Vivo rounded out the top five.
Possible March 8 Event Date
News leaks point to Apple holding its next product launch event on or near March 8. But it could be held in mid- to late March or even April. It likely will be a virtual event because of the lingering Covid-19 pandemic.
Apple stock analysts expect the company to announce other products at the event as well. Those devices could include a refreshed iPad Air tablet and possibly a new Mac computer with Apple-designed chips.
It will be Apple's first product launch event since last October, when it debuted new MacBook Pro notebook computers and third-generation AirPods wireless earbuds.
Analysts and Apple enthusiasts will be looking for hints about upcoming products during the presentation. For instance, if Apple focuses on augmented-reality applications for the new iPhone and iPad, Apple watchers will take that as another sign that the company is planning to introduce AR glasses soon.
After the March event, the next major event for Apple will be its Worldwide Developers Conference, or WWDC, in June.
"I could see them dropping some breadcrumbs about what to expect at WWDC," Ives said.
At WWDC, Apple is likely to announce the completion of its two-year transition to Apple silicon from Intel chips for its Mac computers.
Apple Stock In Consolidation Pattern
Meanwhile, the fact that Apple is able to launch new products during a chip shortage shows the strength of its supply chain, Ives said.
"It speaks to their increased confidence in getting these products into consumers' hands, despite all the challenges," he said.
In the December quarter, Apple easily beat Wall Street's estimates despite worries about product shortages in the holiday quarter. Apple's hardware sales rose 9% year over year to $104.4 billion in its fiscal first quarter ended Dec. 25.
Apple stock has been consolidating for the past eight weeks with a buy point of 183.04, according to IBD MarketSmith charts. It has an IBD Composite Rating of 93 out of 99.
IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
