Merrill Lynch is bullish on Apple

Apple, says Bank of America/Merrill Lynch analyst Wamsi Mohan, has a lot of room to grow.

Over the weekend I got my hands on the 28-page report Merrill Lynch Apple analyst Wamsi Mohan sent to clients Friday. It’s an impressive piece of work, focused on what he calls the “shadow TAM [total addressable market]”—the opportunities Apple has to make billions in markets it has not yet entered.

In 2016, according to Mohan, Apple accounted for nearly 10% of global consumer spending in technology: $218 billion out of a total $2.8 trillion worldwide.

That’s astonishing enough. But there’s more for the taking, according to Mohan, from two large baskets:

  • The $345 billion TAM in markets it’s already in: smartphones, tablets,  wearables, PCs, services, etc.
  • The $295 billion TAM in markets it hasn’t entered: TV sets, TV shows, video games, etc. (Not included: heath and cars.)

There’s billions to be had, of course, by growing market share in the first basket. But Wamsi estimates there’s more to be made—$100 billion or so— that by grabbing low-hanging fruit from the second basket.

Below: A cool pie chart and an awesome spreadsheet.

Merrill Lynch pie chart

Click to enlarge. Not seeing? Try the website.

 

Merrill Lynch spreadsheet

Maintain Buy, raise price target to $180 from $155. 

4 Comments

  1. Fred Stein said:

    “Awesome spreadsheet”, indeed.
    “Productivity Web Services” growing from $443M to $708M could be Apple’s next big thing. They’re way behind, despite trying for decades.It’s iime to “Think different.”

    0
    May 15, 2017
    • Gregg Thurman said:

      As Daniel Eran Dilger would say (paraphrased): If you see Apple in your rear view mirror (no matter how far back), you should start worrying, a lot.

      It is impossible to do everything at the same time. I know, I tried and bankrupted my 17 year old business in the process,

      Better to focus on the one with the greatest profit potential, then after launch reassign resources to #2 and so on.

      1
      May 15, 2017
  2. Gianfranco Pedron said:

    Awesome, but won’t Wall Street, nay, the Universe, implode if the Law of Large Numbers is disproven?

    On the bright side, I can keep my AAPL shares forever if the universe implodes.

    3
    May 15, 2017
  3. Robert Paul Leitao said:

    The analyst’s work is not only impressive for highlighting Apple’s potential for growth in current product and services markets, the report also presents in a cogent way the potential for growth in nascent and related product and services markets. In my view, the analyst makes a strong and compelling case for the firm’s $180 price target.

    1
    May 15, 2017

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