Evercore’s Amit Daryanani, peering ahead to fiscal 2021, anticipates a trifecta of growth factors: services, wearables and 5G iPhones.
From a note to clients that landed on my desktop Friday evening:
All You Need to Know: Revenue growth should continue to accelerate in FY21 as Apple likely benefits from tailwinds across multiple business lines. Specifically,
1) iPhone revenue should grow on a y/y basis for the first time since FY18 driven by pent-up demand for a 5G iPhone (expected end of FY20).
2) Low relative penetration of AirPods & Watch should support around 30% revenue growth in the wearables business.
3) New services continue to gain traction driving a services growth rate around 20%.
Our FY21 estimates are 3-5% above consensus, primarily driven by the top line as we see revenue coming in at $305B vs. consensus at $295B.
Net/net: Despite the sustained impressive performance of AAPL stock, we think the stock continues to work higher from these levels as AAPL benefits from the trifecta of – better services growth, wearables acceleration and iPhone 5G cycle tailwinds.
Click to enlarge.
Maintains Outperform rating, raises price target to $360 from $315.
My take: Daryanani gets to $360 using a multiple of 23 times earning. Six months ago, when his price target was $205 on a multiple of 17, he wrote a prescient note that asked “Can Services Drive Multiple Expansion?”