From a note to clients by analyst Wamsi Mohan that landed on my desktop Thursday:
Key takeaways, implications of our installed base analysis We view the installed base (IB) as a key indicator of the potential of Apple’s ecosystem. The overall IB has grown to over 1.8bn units and fig 5 shows our estimates of the breakdown amongst various devices. The hardware IB is the platform on which Apple builds and grows its services business. We highlight the following:
- Size of the global iPhone IB of about 1.1bn units at the end of 2021 (about 760mn primary and 320mn in the used iPhone IB),
- The used iPhone IB has been growing faster than the new iPhone IB albeit off a smaller base (2017-21 CAGR of 17% vs. 3%), and we expect the higher growth rate to continue (2021-26 CAGR of 15% vs. 2%),
- A larger IB can eventually drive higher consumption of services and sales of incremental devices (halo effect),
- The iPhone IB in China has been growing faster than other regions, and we expect that to continue, and
- Secondary market growth presents a large services opportunity.
Our IB analysis indicates to us that our prior iPhone estimates may be too conservative and we raise our F23/F24 iPhone units from 231mn/222mn to 237mn/230mn. Reiterate Buy on multiple tailwinds on both hardware and services (user growth, ASP, and increased penetration of IB). PO moves to $200 (from $215) on 30x (from 33x) C23 EPS of $6.64 (from $6.53) (lower multiple on increased macro headwinds, and supply chain headwinds).
Maintains Buy rating, lowers target to $200 from $215.
Below: Mohan's estimates of installed base, by device. (Click to enlarge.)
My take: BofA Securities held the market-high target on Apple for 112 days. That spot, according to my records, is not jointly held by Evercore's Amit Daryanani and Loop Capital's Ananda Barauh at $210 a share. For those keeping score, that's $72.65 (35%) above Thursday's closing price.