When it comes to iPhone sales, Apple (NASDAQ:AAPL) continues to overperform. For the current fiscal year, the company sold nearly 75 million units in the first quarter and followed that up with 61 million in the recently reported second fiscal quarter. (Apple operates on a one-forward fiscal quarter, so these are figures for the fourth calendar quarter and first calendar quarter, respectively.) On a year-over-year basis, those figures are up 46% and 40%, respectively, as customers are enthusiastically snapping up the larger-form-factor iPhone 6 and iPhone 6 Plus.
Year-over-year growth figures are even better on a revenue basis, as the iPhone has increased both its unit price and demand at the same time, characteristic of a Veblen good. For a visual of iPhone revenue and growth, see the following chart:
For investors, however, it appears that Apple's new phones aren't done providing returns. At least that's what noted analyst Timothy Arcuri from Cowen & Co. thinks. Recently, Arcuri increased his Apple price target to $140 per share and reiterated his outperform rating. Most notably, he estimated that Apple would sell 50 million iPhones in the seasonally slow fiscal third quarter.
Newer estimates appear to be above prior consensus
Over the past two weeks, it appears that many analysts are either upgrading their unit sales figures for the iPhone or issuing figures above the established consensus. Early this month, UBS's Evidence Lab research estimated iPhone sales of 51.1 million units for this quarter -- a figure nearly 14% higher than the consensus of 45 million units. In addition, UBS's traditional analyst side also marked up its sales figure, with Steve Milunovich revising his estimate to 48 million from 43 million.
And while there's a certain level of gamesmanship among analysts, as well as possible herding behavior, Apple's been known to not only meet analyst consensus, but also to exceed it. Apple has found strong iPhone demand in China, and growth in this hard-to-model country could make consensus figures laughable. And if Apple keeps its current growth trend intact, it's entirely possible to sell 50 million units.
50 million units will be tough, but doable for Apple
For sure, 50 million iPhone units is an aggressive figure for Apple, but it's one I believe to be plausible. As previously stated, the company reported year-over-year unit sales growth of 46% and 40%, respectively, in the first and second fiscal quarters. At the midpoint of those figures (i.e. 43%), Apple would sell 50.3 million units, up from the 35.2 million it sold in the third fiscal quarter of 2014.
If UBS's Evidence Lab figure of 51.1 million iPhone sales is correct -- and historically it has been more accurate than the Street consensus -- Apple will ship more units in its typically slowest quarter than it did in its seasonally strongest fiscal quarter in 2014. During the first fiscal quarter of that year, Apple sold 51 million phones -- a record at the time.
Piper Jaffray analyst Gene Munster has called the iPhone 6 "fundamentally different" from previous product cycles and thinks people are underestimating how well it will sell. He might just be right.