From a note to clients that landed on my desktop Sunday:
Apple will be hosting its first virtual product launch of 2021 this Tuesday which will kick off another major product refresh year for Cupertino. For this product launch the main focus of the event will be iPad refreshes for iPad Pro, iPad mini, and the low-cost iPad…
Taking a step back, in this WFH environment Apple has seen a major renaissance of growth from its iPad growth showing 40%+ YoY growth the last few quarters as more employees/students went through an iPad refresh. We estimate only ~40% of iPad users have gone through a refresh the last year with some clear pent-up demand that these new iPads will unleash in the next few quarters thus giving Apple another product tailwind… (emphasis his)
We believe Apple is heading into a robust period of growth led by its Services business, which saw considerable strength again in the March quarter based on our analysis. The services business we assign a $1.3 trillion dollar valuation range on a SOTP basis given the increasingly importance of this key revenue stream that is getting a new appreciation by investors as Cupertino further monetize its golden jewel installed base. While chip shortages linger, we believe Apple has a yellow brick road of growth ahead led by its iPhone supercycle and new product launches across its entire hardware ecosystem.
Maintains Outperform rating and Street-high $175 price target.
My take: An unfortunate metaphor, with the fake Wizard and all, but I know what he means.