“There is a LONG SHOT that we finally get an AR/VR product announcement.”
From a note to Evercore clients that landed on my desktop Friday:
ALL YOU NEED TO KNOW: Apple will host a virtual event on 9/14 at 10am PT where we expect the company will have multiple product announcements. In addition to the annual iPhone unveiling, we think it is likely Apple will announce a third generation of Airpods and a new Watch. Focus will be on the new iPhone, but we don’t expect any major changes beyond upgrades to the camera, processor and battery life coupled with a smaller “notch”. It is worth noting that while we are coming off of a very strong iPhone cycle, strength can be sustained as Apple continues to gain share in China coupled with increased phone usage/higher disposable income in the US could result in shrinking replacement cycles. Beyond iPhone and Apple Watch, we think there is a LONG SHOT that we finally get an AR/VR product announcement. The video released by Apple to announce the event included an AR Easter egg that could be a subtle reference to an upcoming product unveiling.
Net/net: We think expectations are minimal heading into the event with no one really looking for major upgrades to the iPhone. A notable upside lever could be – carrier promotions. Carriers have spent material $$ to build 5G capacity and could compete for new subscribers with the iPhone cycle. Overall, should AAPL be able to procure enough capacity it could make for a strong iPhone cycle once again vs. current expectations. An AR/VR product announcement could be an upside driver.
Maintains Outperform rating and $180 price target.
My take: Don’t hold your breath for any AR/VR products.