Strong iPhone 6 and iPhone 6 Plus demand is driving up Apple's profits
Mr. Caso told investors,
Following a fresh round of checks post the iPhone 6 launch, we continue to expect 60-65 million iPhone unit production in [the fourth calendar quarter], which is consistent with consensus forecasts of 63-64 million iPhone and our 61 million iPhone shipment forecast. Importantly, we believe the mix of iPhone 6 Plus has increased, we believeX approaching 50 percent of production in 4Q amid strong demand for the larger phone and improved supply. At this point, we believe Apple is producing all they can, and our checks suggest Apple has reallocated capacity from some of the legacy models to the iPhone 6 Plus.
He added that delivery times for both new iPhone models hasn't changed much singe they were introduced in September, according to Barrons. Apple's new models are available with larger displays than previous versions, built-in NFC for Apple Pay mobile payments, improved cameras, and more.
High demand for the iPhone 6 Plus will have a big impact on Apple's bottom line because it offers higher profitability, according to Mr. Caso. “We estimate that iPhone 6 Plus carries about an additional $80 in incremental margin over the base model, yielding about a 10 percent higher gross margin,” he said.
Mr. Caso is maintaining his “Positive” rating along side his new $135 target price for Apple's stock. Apple is currently trading at $119.49, up 0.86 (0.73%).