From a note to clients by analyst Rod Hall that landed on my desktop Wednesday:
We summarize our key takeaways from Apple’s latest 10-K in this short report as well as a few more pieces of analysis. We take a look at disaggregated Services growth rates in the quarter using Google’s disclosure as well as SensorTower data and find that non-TAC/App Store Services growth likely decelerated from peak growth in the March quarter. However, we note that Apple One services bundles became available on October 30 and could drive an uptick in this growth rate in the December quarter. We also note that App Store growth was again a very healthy estimated 31% in FQ4 to September and we also estimate that TAC payments likely contributed substantially to both Q/Q and Y/Y growth as web advertising revenues increased. From the 10-K we look at directional indications that Apple provides by geography for iPhone sales and see a mixed picture of growth in FY20. We also do our normal deep review of the 10-K but most of our other findings are consistent with what we would expect from the later timing of the iPhone launch this year…
Our 12-month price target of $75 is based on 21x our Q5-Q8 EPS forecast of $3.55. Key upside risks include better-than-expected iPhone demand, stronger demand for Wearables, better-than-expected Services growth, OpEx reductions, and significantly outsized buybacks and meaningful dividend increases.
Maintains Sell rating and (deep underwater) $75 price target.
My take: Hall the is the only Apple analyst I know who writes about the company in terms of “upside risks.”
See also Apple 3.0’s Rod Hall archives.