UBS Analysts Project Substantial Growth Due to Strong Apple iPhone 7 Sales

iPhone 7 sales are projected to drive an 8% increase in unit sales for Apple in fiscal year 2017, according to Steve Milunovich and Benjamin Wilson, analysts with Swiss investment bank UBS. The duo recently circulated a note to investors reiterating the investment bank’s “buy” rating for Apple shares, setting a price target of $127.

The analysts cited sources in Asia, noting that Apple was preparing for a supply of iPhone 7 devices, greater than that of the 6s, though not as great as the 6. Apple has apparently raised its iPhone 7 procurement plans for fiscal 2017 to 89 million units, up from 80 million. By comparison, the iPhone 6s procurement was 87 million units and the iPhone 6 procurement was 93 million.

“Given positive pre-order data, aggressive US carrier promotions, and positive supply chain chatter, we have somewhat more confidence that the upgrade cycle may not be lengthening as much as previously thought,” Milunovich said in his report.

Milunovich and Wilson also projected that the release of the iPhone 8 would spur 16% year-on-year growth in sales for the fiscal year ending in 2018, all of which paints a rosy picture of Apple’s future sales prospects.

However, the UBS analysts also sounded notes of caution. First, they pointed out that Verizon Wireless, the largest carrier in the US, hasn’t experienced any extraordinary demand activity for the iPhone 7. Also an open question is how well the new iPhones will sell in the Chinese smartphone market.