“The magnitude of upside especially on iPhones will be driven by supply and not demand.” — Analyst Amit Daryanani
From a note to clients that landed on my desktop Wednesday:
ALL YOU NEED TO KNOW: Apple should report modest upside to Sept-qtr expectations despite concerns around supply headwinds as we think AAPL has largely procured enough capacity for the initial launch – though we do think the magnitude of upside especially on iPhones will be driven by supply and not demand.
We are forecasting ~30% y/y growth in the Sept-qtr (Apple guided “strong double digits”) and margins should also remain elevated with strong iPhone mix and Services growth…
While we are cognizant that comps get more challenging beyond Sept- qtr esp. for Dec-qtr (iPhone 12 Pro/max were launched in Nov last year) and certainly the supply situation is broadly getting worse – focus will be on commentary around the recently launched iPhones and durability of demand in Dec-qtr and beyond.
Street is modelling for only 2% growth in FY22 after 34% in FY21. We see potential for upside through FY22 driven by iPhone share gains in China, carrier promotions and continued strength out of Wearables and Services segment.
Net/net: Apple remains well positioned to deliver both secular earnings growth and significant capital returns over a multi-year period.
Maintains Outperform and $180 target.
My take: Daryanani’s $86.15 billion revenue estimate puts him in the middle of the pack, Street-wise.
As for street’s 2% growth in FY 2020, let’s remember:
1) The street is usually low by a few percent.
2) They likely do not account for buybacks.
3) The street average includes out-of-date projections. The demand for the 13 Pros and the new MacBook Pros will increase 2020 actual results substantially.
Make a mental note of the street’s $5.68 FY 2022 EPS. See ya next year.
One fun way l play the analysts guesses comes off The Price is Right show. The last lady always bids just $1 higher than everyone else.