Analyst Daniel Ives says his bull case of $425 is now “on the horizon.”
Despite the trifecta of headwinds around a global COVID-19 pandemic, soft macro backdrop, and a supply chain continuing to normalize in Asia, Cook & Co. have weathered this Category 5 storm in a Jacques Cousteau-like fashion.
The bedrock-like services business has continued to outperform during this lockdown and is now on pace to exceed $60 billion in annual revenues in FY21 with a projected spike in demand over the coming quarters. At the same time, AirPod sales have remained relatively robust and should approach an eye popping 85 million units sold this year globally vs 65 million last year, which speaks to the unrivaled momentum of this wearables product along with the continued success of Apple Watch.
As we head into the virtual WWDC conference kicking off on June 22, developers should get a glimpse of iOS 14 with a number of mobile enhancements around VR and other software updates over the coming year. This will be a drumroll ahead of a major hardware release schedule ahead across the Cupertino product portfolio with iPhone 12 the main event and growth catalyst for the Street. We are not expecting any major surprises from this annual event, however we believe Apple may be dropping some breadcrumbs around new products/R&D initiatives on the VR and wearables/AirPods front during the course of this highly anticipated virtual conference…
Looking out further, we believe by the end of 2021 Apple has potential to be the first $2 trillion valuation given the 5G tailwinds and services momentum potential over the coming years.
Maintains Outperform rating, raises price target to $375 from $350.
My take: Jacques Cousteau?