Apple Inc AAPL will continue to grow ahead of Wall Street’s expectations from the fiscal year 2022 onwards, Loup Ventures Managing Partner Gene Munster said on Thursday.
Beating Street Expectations: The Cupertino-based tech giant will face more difficult comps as it emerges from the pandemic but will continue to grow revenue ahead of expectations — helped by accelerating digital transformation, Munster wrote in a note.
Munster estimates Apple’s 2021 revenue to grow at 28%, in line with analyst consensus. The analyst expects the maker of iPhones and iPads’ revenue growth to slow down to 8% for both 2022 and 2023 respectively, which would still be well ahead of the industry consensus of 4% annual revenue growth.
For the remaining two years, Munster expects Apple to maintain a 6% revenue growth annually.
Product Brakedown: iPhone, which generates over half of the company’s sales, is expected to grow at 33% in 2021 and those of Mac and Ipads to be 18% and 26% respectively in 2021, Munster noted.
However, Macbooks and iPads sales growth rates will surpass those of iPhones in 2022, the analyst estimates.
Munster expects Mac and iPad revenues to grow 8%, 7%, 6%, and 4% in fiscal year 2022, 2023, 2024 and 2025, respectively. In contrast, Munster estimates iPhone sales to grow 5%, 4%, 2% and 2% respectively.
On iPhones, Munster believes the street is underestimating the multi-year iPhone upgrade cycle that will last through FY23 and only accelerate with the 5G rollout, which is currently limited in the U.S. but will turn into a “must-have” feature once more carriers roll out expansions.
On Mac and iPad, he believes the work and learn-from-anywhere transformation will continue to benefit these product lines for the next three years plus, as employees, students, and organizations settle into the new hybrid paradigm.
Standing Among Peers: The veteran Apple analyst estimates Apple’s revenue growth rate outlook to be lower than its FAANG peers. Munster estimatesFacebook IncFB,Amazon.com IncAMZN,Alphabet IncGOOGL, andNetflix IncNFLXto grow revenue in double-digits in 2022 in the 15% to 19% range.
What Could Go Wrong: Munster however warned he could be overestimating the unfolding digital transformation that could result in a step-down in Apple's growth rates.
Further, the App Store service, Apple’s second-largest revenue-generating unit, could face a 20% headwind if Apple is forced to reduce its cut in half from 30% to 15% in light oflegal action in the U.S. and the European Union.
Price Action: Apple shares traded 0.4% lower at $122.2 in the pre-market session Wednesday.
Comments