Apple likely benefiting from carrier incentives on iPhone 14, BofA says (NASDAQ:AAPL)

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Apple (NASDAQ:AAPL) is likely benefiting as “attractive” promotions from US telecoms, incentivizing people to upgrade to the newly released iPhone 14 line, investment firm Bank of America said on Wednesday.

Analyst Wamsi Mohan, who has a buy rating on Apple (AAPL) and a $185 price target, noted that the incentives are making the new iPhones “more affordable,” given they are being bundled with financing, sometimes making them free with certain trade-in and select plans.

In addition, the cost of the new iPhone 14 line is being spread out up to as many as 36 months and there could be an upfront payment of as much as $100 (or $255 including Apple Care) under certain unlimited data plans and a multi- annual contract.

T-Mobile (NASDAQ:TMUS) and Sprint customers have a 24 month installment plan, while Verizon (NYSE:VZ) and AT&T (NYSE:T) are offering up to 36 months.

Although Apple increased iPhone prices in some regions, early pre-order trends indicate shipment times for the Pro models are stretched out vs. last year,” Mohan wrote in a note to clients, adding that he reiterated his buy rating due to product cycles, services growth, the company’s ecosystem, strong capital returns and additional opportunities to monetize the company’s user base.

Apple (AAPL) shares were fractionally lower in premarket trading at $156.46.

Breaking it down further, Mohan noted that Verizon (VZ) has the “most differentiated” offering among its promotions, as the telecom is accepting damaged devices, a $200 e-gift card for carrier switches and an unlimited plan, where it will give users a subscription to Apple One, which includes, Apple Music, Apple TV+, iCloud+ and Arcade.

Despite the heavy promotions, Mohan noted that the carriers are benefiting as customers are being required to enroll in an unlimited data plan, which can be more expensive than other plans.

On Tuesday, TF International Securities analyst Ming-Chi Kuo said Apple (AAPL) company may offer a “positive outlook” for its all-important holiday quarter due to an improving iPhone mix.

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