Apple is Cowen’s top pick in the growing PC market

From a note to clients by analyst Krish Sankar that landed on my desktop Thursday:

We estimate the overall PC market in CY20 grew 8.3% Y/Y based on units driven by ongoing work- / learn-from-home (WFH/LFH) trends, with client PC shipments growing an estimated 9% Y/Y during C4Q20. We anticipate this momentum to continue throughout much of CY21, leading to shipment growth of 2.5% this year.

This is consistent with our supply chain field work that also suggests notebook PC builds growing low single-digit % in CY21. We believe the product form factor mix will continue to be weighted broadly towards notebooks (estimated 55%) and another healthy dose of Chromebooks (14%)…

In the IT Hardware space, Apple remains our top pick given refreshed MacBook and iPad product portfolios, estimated 70%+ consumer/education sales exposure, and new in-sourced M-series chips that could help alleviate some CPU procurement issues.

We believe notebook and Chromebook growth will continue to benefit HP but an acceleration in earnings will also necessitate a recovery in the Printing business. Dell’s consumer PC exposure is estimated at ~30% and improve once enterprise demand rebounds, i.e. workers return to the office.

Maintains Outperform rating and $133 price target. 

My take: The Mac has been an also-ran in the PC market since, well, since 1984. Correct me if I’m wrong, but I doubt it’s ever passed 10% in terms of PC units shipped. To be, in at least one analyst’s eyes, a top pick… well, that’s something.

8 Comments

  1. Fred Stein said:
    Krish has the right concept. His PT needs to go up.

    It’s about the M1 chip. Intel has long since deprecated their PC chip business to their Cloud chip business. Thus, PC owners won’t have strong reasons to upgrade, unless they upgrade to the MAC. Meanwhile, Mac owners can benefit with a real upgrade. We’re talking multi-year.

    1
    January 14, 2021
    • Gregg Thurman said:
      If you think about it computing is coming full circle from centralized mainframes supporting terminals, to distributed PCs and now back to centralized “cloud” computing.

      Makes you wonder how much power PCs really need going into the future vs the quality of their internet connection. Makes me think of Apple’s 5G efforts. Is Apple going to re-enter home networking with Rooftop I/ o units supporting mobility, ioT and computing? I’d buy one (or two).

      0
      January 14, 2021
    • Mark Visnic said:
      “In the IT Hardware space …” There is your clue why his PT remains too low Fred. The analysts who see Apple as a “hardware company” believe the multiple is stretched. Their optics don’t permit a view that Apple’s earnings model is much more reliable and certain than is true for a hardware company. It is not yet clear to them whether the multiple expansion in 2020 is attributable to an earnings model reset or Fed-driven liquidity. They continue to lean to the latter over the former. In the meantime, Apple’s price is lower than it should be as per Gene Munster’s view that the multiple deserves to be higher. I agree with Gene.

      0
      January 15, 2021
  2. Jerry Doyle said:
    I also believe employees WFH on Macs returning to the office later in 2021 are going to be more demanding of quality office computing equipment and that management will be more accommodating to these demands to facilitate & expedite a smooth transitioning back to the office work environment. You want your employees in good spirits.

    3
    January 14, 2021
  3. Steven Philips said:
    And LVMH could benefit because you want good spirits in your employees! 🙂

    1
    January 14, 2021
  4. Robert Paul Leitao said:
    @PED As far back as I can find market share numbers (1996), Apple has been in the single digits for global PC market share and until 2015 it was rare for Apple to be among the top 5 global vendors of PCs based on units shipped. Please keep in mind, the iPhone’s global market share, measured by units shipped, has vacillated recently from the low to high teens on a quarterly basis. The Mac will perform comparatively better in regions in which the iPhone is more popular. This is market share by unit sales. Revenue share for PCs and smartphones is a much different ball game.

    3
    January 15, 2021
  5. James Dean said:
    A three letter acronym… M1X

    Dateline 6/7/2021

    Apple introduces the new M1X, and Mac OS 15, a paradigm shift.

    The new normal, AAPL garners 20% market share in the worldwide PC biz…

    PED’s take… Wow!

    PS. Daniel Ives upgrades AAPL to $176.00

    2
    January 15, 2021
  6. James Dean said:
    Date line 3/16/2021

    Apple introduces the new iPad mini 6, using the new TSM built 5nm 14X processor, four Firestorm CPU’s, 2 Ice Storm GPU’s and 18 hours of video playback.

    2
    January 15, 2021

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