From a note to clients by analyst Amit Daryanani that landed on my desktop Tuesday:
April smartphone data points to an overall slowdown in the smartphone market for the month, though somewhat of a less muted data point for AAPL.
The smartphone data suggests iPhone units were down -27% y/y in the month of April (~flat m/m). We would add that while this month’s results mark continued deceleration from March, the previous two months of shipments (January/February) were up an impressive 160% vs. the same two month period in 2019 (perhaps more relevant given easier compares in 2020 as shutdowns took effect), pointing to more durable broad-based strength.
We would also note that y/y compares are rather difficult for iPhones, with MNC shipments up 48.6% in Apr-20. Taking a broader look at the overall smartphone market in China, the data shows some decline as shipments shrunk by -33.8% y/y and -23.5% m/m.
The data set includes shipments broken down by domestic vs. multi-national companies. Apple accounts for greater than 90% of the multinational (MNC) shipments, so it serves as a reasonable proxy now that shipment data is no longer broken down by operating system.
Recently, in Apple’s Mar-qtr print, we saw the company achieve 67% growth in iPhones, and the monetization narrative that is now just starting to take hold and could drive sizable upside.
Net/net: While April data is somewhat muted, we expect growth to remain strong for AAPL in Jun-qtr and beyond as the company benefits from a trifecta of – iPhone growth in N. America (stimulus + reopening), ecosystem expansion, and monetization of their install base.
Maintain Outperform rating and $175 target.
Cue the chart:
My take: Daryanani has let Daniel Ives’ target get ahead of him again.