Apple: Cowen Shifts Estimates on ‘iPhone 5S,’ Sees Europe Price Cuts

By Tiernan Ray

Cowen & Co.’s Matthew Hoffman today reiterates an Outperform rating on shares of Apple (AAPL), while cutting his fiscal 2013 estimates, but raising his fiscal 2014 estimates, on changing time frame for what he speculates will be an “iPhone 5S” later this year.

The purported 5S would be equipped with support for China‘s home-grown “TD-SCDMA” 3G network, speculates Hoffman, drawing in part upon work from his colleague, chip analyst Timothy Arcuri. Arcuri thinks that construction of a 5S is trending to June, which is later than the April “ramp” that Hoffman had been modeling. He thinks a phone will arrive in the fiscal fourth quarter of this year, the September-ending period.

Hoffman also speculates Apple will have “at least one iPhone model with a >5″ display for late 2013/14,” he writes, which might “shore up the platform”:

Smartphone announcements at last week’s Mobile World Congress continue to signal a market shift away from small displays (e.g. LG’s Optimus G Pro display measures 5.5″; ZTE’s Grand Memo has a 5.7″ display). Checks at MWC strongly suggests Apple will add an iPhone variant with a 5+” display.

At the same time, Hoffman thinks retailers in Europe are cutting prices to move iPhone units:

Our European contacts suggest that channel remains well (over?) supplied with iPhones, though robust promotional activity is now helping to spur demand. What is less clear is exactly how much support Apple is providing for those clearing campaigns. We note demand elasticity for lower-priced Apple smartphones remains high; remember that the $100 or so price cut on the iPhone 4S and 4 drove both SKUs into shortage during F1Q13.

Hoffman cut this fiscal year estimate to $182 billion and $44.95 per share in net profit from a prior $188 billion and $46.70. For 2014, he projects $217.4 billion and $55.25, up from a prior $212 billion and $55.

Apple shares today continued to chart new lows, hitting $419 before closing down $10.42, or 2.4%, at $420.05.