Gene Munster: Apple will be the best performing FAANG stock in 2019

From Loup Ventures’ 2019 Tech Predictions:

First, we believe the theme of Apple as a Service will slowly take root in 2019. Apple’s new reporting methodology will help focus investors on revenue and earnings growth, which should advance the view of Apple as a Service. This greater confidence in revenue and earnings visibility should be positive for AAPL’s multiple as well. Second, Facebook, Google, and Amazon will be facing regulatory headwinds (see prediction #4). Apple, on the other hand, has successfully prioritized consumer and data privacy as foundational to its products. Third, in 2019, anticipation will begin to build for ways to play the 5G rollout in 2020 or 2021. 5G will be the biggest new iPhone “feature” since the larger-screen iPhone 6 in 2014.

My take: Munster has been bullish on Apple for as long as I can remember.

7 Comments

  1. Robert Paul Leitao said:
    Gene Munster has been bullish on Apple for as long as anyone can remember. In this case, I believe his prediction is an accurate one.

    iPhone sales haven’t slowed. Although new iPhone sales may have remained below FY2015 levels for the past three years, the pace of sales of pre-owned iPhones hasn’t abated and this phenomenon is increasing the global base of iPhone owners by the day.

    Apple is delivering to market the highest quality and most advanced smartphone handsets available on the planet. A new iPhone sold today is likely to be in service more than three years from today. The goal for Apple isn’t to sell the most handsets. Rather, the goal is to sell the best and most advanced handsets possible for the benefit of customers and to foster Services consumption.

    The growth in Apple’s eco-system and global economic footprint can no longer be measured accurately by the number of new iPhones Apple sells each quarter and each year. The best proxy for measuring Apple’s growing global economic influence is Services revenue.

    As Services revenue comes closer to center stage and into the spotlight, valuation models will be revised to reflect the higher margin per revenue dollar from Services versus device sales. This isn’t to say new iPhones sales won’t periodically move higher in future years, but it’s the innovation packed into each new iPhone that creates increasing opportunities for Services attachment and this needs to be considered by analysts in their valuation models.

    2
    December 26, 2018
    • Gregg Thurman said:
      but it’s the innovation packed into each new iPhone that creates increasing opportunities for Services attachment

      I don’t think the above is entirely accurate. Because the consumer can continue upgrading the OS of his iPhone years after its original purchase the number of opportunities for Services attachment is greater than new iPhones alone.

      0
      December 26, 2018
      • Robert Paul Leitao said:
        Gregg:

        The reason why consumers can upgrade to the latest versions of iOS year after year with legacy handsets is because of the innovations that were built into the handsets at the time of original purchase.

        I don’t upgrade my iPhone each year under the annual upgrade program because I want a shiny new thing. I upgrade my iPhone each year for the latest advances that include greater battery efficiency and the performance enabled by the latest SOC. While I prefer these advances today, they will be necessary three years and four years from today for whoever owns the handset to run the latest versions of iOS with satisfactory performance.

        I think you may have misunderstood my point. iPhones are engineered today to provide for robust Services attachment three and four years from today for whoever at that time may own the iPhone.

        0
        December 27, 2018
        • Gregg Thurman said:
          I think you may have misunderstood my point.

          I did

          0
          December 27, 2018
  2. Alan Birnbaum said:
    To paraphrase Professor Henry Higgins:

    “By Jove, I think I got it”

    My wife traded in her iPhone 6 for $ 150 and got an 8s.Apple’s price is significantly higher than Gazelle ($65) and makes the phone less expensive to buy(also essentially decreasing Gazelle’s supply of used iPhones). Apple refurbs (in India), resells in India or similar country with warranty to in that country , etc and locks in the buyers (both the American, my wife, as well and the refurb buyer). No significant change in GM and expands the IB.
    WOW !!
    For a technical explanation, see Robert above

    0
    December 26, 2018
  3. Martin Beutling said:
    “My take: Munster has been bullish on Apple for as long as I can remember.”

    ….And he was quite right, so far, wasn’t he?

    1
    December 27, 2018
    • Scott Davis said:
      Can you say “Apple Television”?

      – Dr. Scott

      1
      December 27, 2018

Leave a Reply