In the wake of Samsung's Galaxy Note 7 disaster, the prevailing sentiment has been that Apple (NASDAQ:AAPL) stands to be one of the key beneficiaries. The iPhone 7 Plus is a pretty compelling alternative phablet to the Note 7, and Android switcher rates continue to rise, according to Apple execs on every conference call. A direct rival's loss should be the Mac maker's gain, right?
Not so fast.
Word on the Street
Nomura analyst Jeffrey Kvaal has put out a research note (via Tech Trader Daily) that suggests Apple may not be as big of a beneficiary as you might think. Contrary to popular thinking, Kvaal does not expect any material upside related to the Galaxy Note 7 recalls and subsequent discontinuation.
The analyst cites strong loyalty among Samsung customers, based on reports that 80% to 90% of customers returning a Note 7 are picking another Samsung device as a replacement. It's usually the Galaxy S7 Edge that people are picking. It does so happen that Samsung is offering $75 promotions for people to stick with the brand, a move that could very well be paying off.
On top of that, it's not like consumers can readily get their hands on an iPhone 7 Plus, which remains heavily supply constrained. While the smaller iPhone 7 has better availability, the 5.5-inch model is rather hard to come by and new orders don't ship for three to four weeks. Customers that are returning the Note 7 need a replacement phone now, and can't wait that long.
Overall, Kvaal is still quite bullish on Apple, maintaining a buy rating alongside a $135 price target.
A second opinion
In contrast, KGI Securities analyst Ming-Chi Kuo does believe that Apple will grab some defectors. Kuo is expecting Apple to win an additional 5 million to 7 million iPhone 7 unit sales from consumers coming off a Note 7. The dual-camera system could be a strong selling feature, and the analyst believes many users will be disenchanted with Samsung after the ordeal.
These estimates are just the latest guesses to come from the Street. Earlier estimates ranged anywhere from 8 million to 15 million incremental iPhone sales that Apple could grab. It's also not as if we'll be able to go back and track how many buyers actually did switch, so I wouldn't worry too much about the specific unit estimates.
Still, just the likelihood that Apple will be able to poach some Note 7 users has reinvigorated the broader iPhone 7 optimism that has pushed Apple shares higher over the past month. The stock is now trading near 52-week highs after stumbling for most of 2016. Investors have already benefited quite a bit from the debacle.