Does an increased iPhone 5S inventory mean that Apple (NASDAQ:AAPL) has resolved its production issues, or has demand simply slackened? In a recent note to investors, Piper Jaffray analyst Gene Munster reported that nearly every Apple Store has some version of the iPhone 5S available.
This contrasts with last year’s availability of the iPhone 5, when there was “essentially zero” iPhone 5 availability at most stores during the second week after the initial launch. Munster checked the availability of all versions of the AT&T (NYSE:T), Verizon (NYSE:VZ), and Sprint (NYSE:S) ”space gray” iPhone 5S at 60 different Apple Stores on October 2 and October 3.
According to the analyst’s checks, approximately 30 percent of the nine different versions of the “space gray” iPhone 5S were available with 98 percent of the stores having at least one of these models. At this time last year, most stores had no available iPhone 5 models.
Munster believes there could be several reasons for the year-over-year difference in the iPhone’s availability. First, aside from the fingerprint sensor, there are fewer overall changes between the iPhone 5 design and the iPhone 5S design. Last year the iPhone 5 introduced a new screen size and casing size that may have caused more yield issues in Apple’s supply chain.
The only design element that could be causing production constraints this year is the fingerprint sensor. According to Munster, Apple may soon be resolving the fingerprint sensor yield issues that were responsible for the limited iPhone 5S supply during the initial launch.
However, due to the early production constraints, Munster believes that the December quarter will provide a truer sense for the actual consumer demand level for the iPhone 5S. The analyst expects Apple will sell about 53 million iPhone units in the December quarter. Piper Jaffray maintains an “Overweight” rating and a $640 price target on Apple stock. Here’s how Apple traded over the past five trading sessions.
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