Apple's 'Unleashed' event: What the analysts are saying

Excerpts from the notes I've seen. More as they come in.

Tom Forte, Davidson: MacBooks, and HomePods, and AirPods: Oh My! BUY. We are reiterating our BUY rating for AAPL and increasing our price target to $175 from $167, based on our discounted cash flow analysis that includes our long-term adj. EBITDA margin forecast of 35.0% (unchanged) versus 25.7% in FY20. Buy. To $175 from $167. 

Wamsi Mohan, Merrill Lynch: Trying to decouple from PC industry trends. Apple benefited from growth in the Mac business during the pandemic given the focus on remote work/school, growing Mac revenues at an impressive 22%/11% in F21/F20 vs. an average of 1% for the prior 4 years. With the new M1/M1 Pro and M1 Max chips, Apple could take more share in higher end notebooks (Figures 1-12). We currently model Mac revs in F22 to grow 1% despite a more negative view on the broader PC market where we expect units to decline 6% and revenues to decline 5% in C22. Neutral. $160. 

Chris Caso, Raymond James: New AirPods and Macs - Icing on the Cake. Apple hosted another virtual “Unleashed” event on Monday with multiple product updates centered on AirPods and Macs. While iPhone is still the main driver of Apple earnings, when iPhone is doing well (as we believe is the case now), the other product lines become icing on the cake, as incremental earnings drivers. We expect AirPods and Macs to be a part of that icing during this holiday season, as new 3rd generation AirPods help AirPod blended ASPs and wearable margins, and as Macs continue to take share due to superior performance driven by Apple’s internally developed silicon. Outperform. $185.

Gene Munster, Loup Ventures: Apple's Beating Intel At its Own Game. The biggest surprise of the event was related to pricing increases. The price of the new 16 in. MacBook Pro increased by 4%, entry-level AirPods by 13%, and 54% for the new 14 in. MacBook Pro compared to the previous 13 in. model. We don't expect the higher prices to soften demand because Apple's a case study in virtuous cycles of mutual benefit. The idea is that the company benefits from increased prices, while consumers are happy to pay the higher prices for the increased utility. It's a win-win that ultimately benefits $AAPL investors.

Amit Daryanani, Evercore: Please don't stop the music or the major silicon advancements. The new MacBook Pros will feature upgraded silicon with Apple announcing two new versions of the very popular M1 chip. The prior M1 chip was already a market leader, so Apple is really lapping the competition with its latest offerings. The new MacBook Pros will also feature better battery life and significantly more ports relative to the prior generation (HDMI especially notable). We think these new MacBook’s will see significant demand given the major upgrades to performance and battery will make it the best “workstation” laptop on the market. Outperform. $180.

Daniel Ives, Wedbush: Apple Product Launch Takeaways; New AirPods and Mac Pro Front and Center. Apple today hosted its virtual launch which did not disappoint as Cook & Co. announced its AirPods 3 and new Mac Pro with the M1 Pro/Max chips. Both of these products have been long anticipated and its "a statement" that Apple is announcing these key hardware innovations into holiday season despite the chip shortage overhang as Cupertino further flexes its muscles. These products add to the biggest hardware product cycle (with iPhone 13 leading the pack) at Apple in roughly a decade and remains a major growth catalyst for the story heading into 2022. Outperform. $185.

Angelo Zino, CFRA: Best in class. At its UnLeashed Event, AAPL introduced two new MacBooks (14-inch and 16-inch versions) based on the M1 Pro and M1 Max (two new internal chip designs offering superior processor/GPU performance). The devices come with display upgrades (utilizes mini-LEDs), enhanced speaker systems, keyboards changed back to physical from touch, a FaceTime camera, MagSafe for charging, and more ports (SD card reader, HDMI port, headphone jack). Both devices start shipping on 10/26 and start at $1,999 and $2,499. Also, AAPL's third-gen AirPods are redesigned (similar look to AirPods Pro) with spatial audio, sweat/water resistance, and longer battery life (6 hours, 30 hours with charging case)... While supply constraints are an issue, we think new Mac offerings are best in class and should allow it to sustain sales at an elevated level/take more PC share. Buy. $160. 

Gene Munster, Loup Ventures: Gene just did a stand-up for CNBC Pro. I'll post the YouTube video when it arrives. [Posted below] Asked why the stock popped, he suggested it was the Street's increased conviction that the Mac business might actually grow next year -- by 10% in 2022, he estimated, against "huge" compares.

Cue the full event:

24 Comments

  1. Kenny Kruger said:
    M1 Max surprised! Insane power under 100 watts. Incredible.

    7
    October 18, 2021
  2. I enjoy watching my stock ticker during these events, listening for key messages deep-pocketed investors may respond to. Twice they mentioned “You can order today and get them next week.” Each time the share price started trending sharply up. Only a hunch but sometimes we learn of new products that won’t be available immediately. Not today.
    The incredible M1 Max/Pro are only used by Apple, no competition for that chip supply. Every major film studio, including those associated with Apple TV+ just ordered a few new MBPs simply because they ARE available & are certain to speed up certain post-production edits.
    I realize there are other chips & cameras inside but I strongly suspect a large number of the new MacBook Pros are already staged in warehouses near key markets right now, not in 40 foot shipping containers off the coast of LA, Savannah or Hamburg. Apple is about to score another hardware home run, proving Bloomberg’s Apple faux shortage story baseless, possibly even libelous. Tough for some reporter attempting to twist the car chip shortage into a problem caused by the likes of Apple.

    6
    October 18, 2021
    • Adam Stein said:
      Good observation, Thomas. Part of the recent FUD around Apple has been about supply constraints, and having the new laptops available “next week” was a good antidote to the narrative that Apple can’t ship products right now.

      4
      October 18, 2021
      • Robert Paul Leitao said:
        Adam: I understand your point and it’s a good one. However, any custom configurations have an early December ship date. It’s heartening even on custom configurations deliveries are currently within the quarter and in time for the holidays. Apple’s supply chain management has become a conspicuous competitive advantage.

        5
        October 18, 2021
        • Brian Loftus said:
          Bought 16 in Mac book pro for wife who does Photoxhop, Illustrator, etc. Planning some videos for work. Upgraded RAM and GPUs and ship date is Nov 5-10. With AppleCare – did spend $3800 including cables I bought. Much more than typical Apple laptop buys in the past. On the other hand, may avoid the neeed for her to have a desktop.

          1
          October 19, 2021
  3. Romeo A Esparrago Jr said:
    I hope Daniel Eran Dilger posts his thoughtful analyses on the M1 Pro/Max. I miss his chip articles.

    13
    October 18, 2021
    • John Konopka said:
      We should invite Daniel for one of our zoom sessions.

      23
      October 18, 2021
  4. Gregg Thurman said:
    I see significant Price Target upgrades after OCT Earnings report.

    0
    October 18, 2021
    • Dan Scropos said:
      I miss Brian White. He’d be at $222 I suspect.

      3
      October 18, 2021
      • Robert Paul Leitao said:
        Dan: Be careful. He’s like Lord Voldemort around here, “He-Who-Must-Not-Be-Named.” Don’t ask why! We’re actually on the lookout for an “Apple Wizard” more like Albus Dumbledore with the best analysis on the Street. I’m waiting on a few more analysts to weigh in on today’s event.

        1
        October 18, 2021
          • Robert Paul Leitao said:
            Whatever you do, don’t ask why! In the meantime, more analysts notes are flowing in. Gene Munster and Dan Ives are always at the top of my list. Hopefully there will be a note from Katie Huberty at Morgan Stanley soon. We’ll see who wins the Albus Dumbledore award for best analyst coverage of the event. Harry’s not in the running. He’s currently obsessed with some kind of weird Warthog crypto thing.

            3
            October 18, 2021
            • Gregg Thurman said:
              We should include Laura Martin as an analyst to watch.

              2
              October 18, 2021
    • Robert Paul Leitao said:
      Gregg: I’m hopeful. Much will depend on the December quarter narrative from management. At this time I’m seeing more price target reductions than increases on the equities I track. Overall, it appears analysts are becoming a little more cautious in their estimates. With a few notable exceptions – Dan Ives, Gene Munster, Katie Huberty, Amit Daryanani & Samik Chatterjee – analysts seem to be too focused on iPhone shipments in their valuation models.

      0
      October 18, 2021
      • David Emery said:
        Seems to me there’s substantial -potential- that Apple will make more profit on the new laptops. That’s based on the M-series integration, which removes dependence on 3rd party RAM. I don’t know what other chips the new laptops might have removed from the previous Intel versions, but every chip not purchased adds to Apple’s net profit.

        5
        October 18, 2021
        • Gregg Thurman said:
          but every chip not purchased adds to Apple’s net profit.

          Add to the above that Apple is no longer paying Intel’s gross margin for its processors, and can use smaller batteries while achieving better battery life. The financial benefits from developing its own silicon are myriad.

          Mac gross margins are going to significantly expand as unit sales grow double digits YoY.

          It’s a perfect storm, and it’s about to run over the Wintel community.

          4
          October 18, 2021
          • Robert Paul Leitao said:
            Gregg: I’d like to add to your comment not only will Apple achieve greater margins from not having to pay the “Intel processor tax,” strategically it denies Intel revenue flow from a huge segment of the high-margin, pro-level/high-end consumer market. It’s no wonder Intel is freaked and is scrambling to recover in the PC market. Even high volumes of commodity-grade PC sales with low-margin chips can not replace the loss of Apple as a customer. In today’s report, Merrill is essentially forecasting non-Apple PC sales will go south y/y in 2022.

            0
            October 18, 2021
  5. Robert Paul Leitao said:
    Interesting to see Merrill forecast a PC industry decline y/y as we move past the pandemic. Prior to the COVID-19 emergency, the global PC market had been in a steady state of decline. I expect Apple’s Mac revenue to increase in FY2022 (despite challenging compares) in part due to pent-up demand for M-series products and demand resilience in the pro/higher-end consumer markets.

    3
    October 18, 2021
  6. Jerry Doyle said:
    With all the pricing increases I am confident consumers will embrace as added value or otherwise Apple would not have made the increases, I suspect we will see blowout profits reported for Q1 2022 next January. It almost sucks the oxygen from one’s lungs at how Apple is firing on all cylinders and reporting these robust performance numbers and WS basically, yawns. I suspect WS soon will need to wipe that yawn off their faces. There is no stopping Apple as it seems intent in opening its throttle all the way and something tells me it has lots more horsepower to unleash in the coming months and even years.

    5
    October 18, 2021
    • Richard Weathered said:
      Add to that the news hiding in plain sight is TSMC’s ambitions for building EV’s for other companies and perhaps it’s own brand with facilities in the United States

      2
      October 18, 2021
  7. David Drinkwater said:
    So my current Mac Pro is a MacBook Pro (13-inch, 2016, Four Thunderbolt 3 Ports), weighing in at 3.0 pounds with a 13″ screen. The new 14″ screen only wights 3.5 pounds with a 14″ screen and is screamingly faster. Seems like a no-brainers.

    Two things I find missing:

    1) TouchBar (yes, really. I think it’s pretty cool, but I think it should have been elevated to the aluminum rail immediately *above* a full function key rail. It would have been doable.)

    2) Cellular. Just saying.

    I still think the MacBook Pro slabs (I won’t call them boxen) rock booty, and I think Apple will be handsomely rewarded for their efforts. I’ll look at a 14″ in the store. I’m not in a rush. I quite like the current slab that I am typing on.

    So that’s my two bits.

    Oh, I almost forgot: What about the new Mac Pro when it comes, fully laden with M1 hardware? I don’t remember for sure, but I think it was Phillips that had the “rock your face off” sound wall advertisements. I think the new Mac Pro will do that.

    0
    October 19, 2021
    • Bart Yee said:
      My comment from yesterday may be more apropos as a piggyback question to your question:

      So my query is when will Apple introduce the full blown Mac Pro desktops for the maximum major creative users like studios, movie makers, pre- and post production, special effects, etc. that don’t need portability but need the absolute best in power, graphics, RAM (64-128-256-512GB or higher RAM), expandable SSD storage, and of course 2-3-4 or more XDR Video display support?
      I’m talking about $2500-$5000 min up to $10-20K machines where performance at cost no object to replace existing Mac Pro desktops or Wintel i9/Xeon Platinum or Gold workstations.

      Imagine these with M1 Max, single, dual or even Quad processors, multiple graphics GPUs or cards, 5-10TB of SSD storage, and of course, native network capability and security.

      The boundaries are then only in what the software applications can address. I have a strong feeling software and app developers are going to be working way overtime expanding and creating for these Apple MacBook Pro and Mac Pros.

      4
      October 19, 2021
  8. David Drinkwater said:
    I agree, Bart. The Big Bad Voodoo Daddy.

    2
    October 19, 2021

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