Evercore expects iPhone 16e to improve Apple sales

Evercore analysts expect a sizable revenue bump from Apple Inc's (NASDAQ:AAPL) recently unveiled iPhone 16e and also lauded the company’s new modem chip, both of which they expect to boost margins in the coming months.

Evercore said that the new iPhone model, which is being angled as a budget offering- was priced ahead of expectations at $599.

“Given the higher pricing, we now think SE can add about $14 billion in iPhone sales revenue,” Evercore analysts wrote in a note.

They expect the 16e to help Apple maintain its strong sales in emerging markets, which tend to be much more cost conscious. India, Southeast Asia, and Africa represent major potential markets for Apple, as it grapples with a sales decline in China. 

Evercore also noted the reveal of Apple’s new C1 modem chip, which will be used in the iPhone 16e and will also likely be present in upcoming iPhone models.

Apple claimed improved battery performance with the new chip, with Evercore analysts stating that the new chip should also add to Apple’s gross margins. 

“We also think the price increase and inhouse modem chip could be a precursor to a similar strategy for the upcoming iPhone 17 launch,” Evercore analysts said.

The brokerage maintained Apple’s rating at Outperform with a $260 price target. 

The iPhone 16e will support Apple’s artificial intelligence features, and comes amid declining sales for the technology giant. Heavy competition in China and stagnation in developed markets chipped away at sales over the past year, with the addition of AI doing little to improve weak sales. 

The company is also yet to find an AI partner in China, and has not launched any of its Apple Intelligence features in the country.