New Info Suggests Rumored Fingerprint Scanner On The New iPhone Is Unlikely

Expectations for Apple Inc. (NASDAQ: AAPL)'s upcoming iPhone are quite high and anything short could be viewed by some as a disappointment. Analysts at KeyBanc delivered some bad news to investors that could result in a "negative impact" for Apple in terms of units sold.

KeyBanc's Andy Hargreaves commented in a report that checks with members of Apple's supply chain suggest the company is unable to find workaround solutions to include the in-display optical fingerprint. In fact, the new OLED iPhone could be sold to consumers without a fingerprint sensor.

"Without this critical feature, we see a negative impact to the next iPhone cycle," Hargreaves wrote. " In regards to Apple, we believe this will ultimately lead to disappointment for more-bullish investors."

However, this doesn't necessarily imply downside to Apple's stock as initial demand for the iPhone 8 will still be "strong," the analyst added.

Moreover, supply constraints that Apple is also tackling will create "positive news flows" and there is little reason to believe demand for the new iPhone through early next year will be poor. This would give Apple's stock a positive risk to reward profile in the near-term.

Finally, despite the absence of a fingerprint sensor, the analyst remains bullish on members of Apple's supply chain, including Broadcom Ltd (NASDAQ: AVGO), Cirrus Logic, Inc. (NASDAQ: CRUS), Cypress Semiconductor Corporation (NASDAQ: CY), and Skyworks Solutions Inc (NASDAQ: SWKS) for two reasons:

1. Apple's guidance and consensus estimates aren't calling for a "super cycle."
2. Secular content and share gains imply upside to estimates for the suppliers.

Hargreaves maintains a Sector Weight rating on Apple's stock with an unchanged $150 price target.

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