“Unlike many companies, it’s a function of time before Apple wins the sale.”
From “Apple Preview: Outsized Demand Wrestles With Undersized Supply” posted Tuesday to Loup Ventures subscribers:
Apple’s September quarter results and commentary around the December quarter will likely follow a well-traveled narrative of demand outpacing supply, but with a twist. The twist is that unlike many companies, it’s a function of time before Apple wins the sale. In other words, today’s supply pains will eventually equate to 2022 sales gains. We believe investors will leave the September quarter results with a belief that the step up in demand is sustainable, driven by the accelerating digital transformation for the foreseeable future.
It’s clear that growth will slow next year, as it will for almost all big tech. For Apple, we believe FY22 revenue growth will likely end up in the mid to high single digits compared to the Street, which is looking for 4% growth. If Apple continues to modestly exceed expectations over the next year, we believe shares of AAPL will continue to appreciate. If the next year plays out inline with our expectations, we believe shares of Apple can reach $200 in the next one to two years, based on applying a 28x multiple to EPS of $7 in 2023 (the Street is around $6).
We believe that 7-9% top-line growth is sustainable for a few years until Apple launches into new product categories like AR, wearables, wellness, and automation (maybe vehicles). At that point, growth will step up again putting investors’ growth sustainability questions to rest, at least for a few more years.
My take: That step-up in growth from new product categories that Munster predicts is nowhere priced into the stock.