Gene Munster’s Apple June quarter preview

On the road to $200 a share (but don’t hold your breath).

From a note to Loup Ventures subscribers that landed on my desktop Saturday:

Apple will report June quarter results on Tuesday, July 27th. We expect fractional upside to June consensus revenue growth estimates of 23% y/y and EPS of $1.01. The numbers will continue to have noise given that comps are the most difficult they’ve been since Sep-18, along with component shortages that likely had a $3-4B negative impact on the Mac and iPad sales. If not for the component shortages, revenue growth would likely be closer to 30% y/y. We expect the results will continue to instill confidence that the company will grow revenue around 30% in FY21, compared to 6% in FY20. The accelerating digital transformation will continue to be a tailwind for Apple’s revenue growth for the next several years…

Putting it together, we believe shares of AAPL will approach $200 (35% upside from current levels) over the next couple of years, based on 35x our 2022 EPS estimate of $5.70.

Munster’s estimates:

Fiscal Q3 2021:
Total revenue: $74.8B
EPS: $1.04
Revenue by segment:
iPhone: $36.0B
iPad: $7.2B
Mac: $8.0B
Services: $15.8B
Wearables/Home/Accessories: $7.8B
Gross margin on total revenue: 40.0%

My take: Munster is a venture capitalist now, not an analyst, but I don’t hold that against him.

7 Comments

  1. Michael Goldfeder said:
    While Gene’s numbers are a bit on light side, they’re still very solid IMO. The most difficult assessment in Apple’s 3rd quarter numbers is a combination of the increased buybacks in April, May, and half of June at very low figures in the 120ish range.

    Couple that with the 3 to 4 billion loss of sales that Luca projected due to supply constraints for the Mac lineup in last quarter’s phone call. While those sales aren’t going away, it’s difficult to reconcile what amount were booked, as opposed to carried over into the next earnings period.

    Let the dart throwing begin.

    2
    July 24, 2021
    • Gregg Thurman said:
      Couple that with the 3 to 4 billion loss of sales that Luca projected due to supply constraints for the Mac lineup in last quarter’s phone call.

      A “loss of sales” from what point? Out of context Luca’s statement has little meaning.

      0
      July 24, 2021
  2. Gregg Thurman said:
    I just downgraded my Estimize estimates to 78,440 B and $1.18.

    0
    July 24, 2021
  3. Jerry Doyle said:
    “…. we believe shares of AAPL will approach $200 (35% upside from current levels) over the next couple of years, …”.

    Duhhh! Gene has been so cautious since his involvement with Loop Ventures that his forecasts become almost meaningless. Gene says “We believe shares of Apple will approach $200 over the next couple of years.” What a runway he gives himself! That runway is so long that it almost becomes meaningless to me. Who among us doesn’t believe Apple will be a $200 stock two years from now? It is similar to hiring a fishing guide to guide you to the unique fishing spot only for the guide to turn to you as your boat is propelled into the water and say, “The fish are out there in those waters…. Well, I have told you where the fish are so I am staying on the bank. You now know where to go.”

    As much as I love Apple and as a long term investor in Apple for decades, if I believed the target price would not reach $200 until some period into 2023 I would bail now. Gene is approaching to being no value to me anymore other than pulling up the rear.

    0
    July 25, 2021
  4. Dave Ryder said:
    “…based on 35x our 2022 EPS estimate…”? 35 PE seems rich to me.

    0
    July 25, 2021
  5. Mark Visnic said:
    First, 35x FY ‘22 @ $5.70 would be a trailing PE in about 16 months so Gene’s ~$200 price target computes to about a 16 month timeline. Second, FY 2022 EPS of $5.70 would be single digit growth over 2021. That is far too low. 15% or more is more likely and that yields a minimum of $6.00. $200/6 = 33.3 trailing PE in 16 months AAPL easily could be $210-$225 with 20-25% EPS growth and a 33-35 multiple.

    1
    July 25, 2021

Leave a Reply