Amit Daryanani

Chart of the day: Apple's low end iPhone opportunity

September 5, 2013: 2:49 PM ET

Only 2% of Apple's unit sales have come from iPhones selling for less than $300.

Screen Shot 2013-09-05 at 2.18.21 PM

FORTUNE -- In a note to clients Thursday, RBC's Amit Daryanani used Strategy Analytics' market research to estimate what a $300 iPhone 5C might do to Apple's (AAPL) bottom line.

Even with the heavily discounted iPhone 4 in the mix, only 2% of Apple's unit sales so far have come from iPhones selling for less than $300. (Samsung, by contrast, gets 60% of its smartphone sales from devices that cost $300 or less.)

Daryanani thinks that could change after next week's special event:

"We believe Apple is going to capitalize on the low-end smartphone market by launching a new phone that will address what we consider to be a ~500M total addressable market in CY14E. In our view, AAPL should be able to quickly penetrate this market up to and beyond the 15% mark in the medium-term (we estimate AAPL has 40%+ share in the premium market).

"From an EPS perspective we believe the Company can add $4.00+ in EPS to our CY14E estimate of $39.74, with a successful launch of an affordable iPhone. On a 12x multiple, this would add roughly $50 to Apple's stock-price. We believe our ~56M unit estimate is conservative given that it represents 12% of the total low-end Smartphone market."

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