Mac and Services to Provide AAPL Upside

AAPL investors can still expect an upside when during Apple’s forthcoming earnings call thanks to Mac and services. That’s according to J.P Morgan analyst Samik Chatterjee in a note seen by AppleInsider.

Lead analyst Samik Chatterjee writes that the setup heading into Q1 2021 earnings is “dramatically different than the last one,” since the focus on near-term earnings drivers has moderated after the busy holiday season. Specifically, iPhone builds are slowing down, led primarily by softening smartphone shipments in China and slowing momentum of 5G-equipped iPhone 12 and iPhone 12 Pro sales. Relative to sell-side consensus, Chatterjee believes investors are primed for softer results. However, the analyst still expects modest upside to investor expectations. He cites strong growth in Services and the current momentum in Mac and iPad shipments as the primary driver, despite concerns that work from home trends will wear off. JP Morgan is tracking iPhone revenue in line with expectations.

Morgan Stanley Lowers AAPL Target Despite Services Growth

Morgan Stanley analyst Katy Huberty has lowered her target price for AAPL. However, according to a note seen be Apple 3.0, she did forecast that Apple Services revenue growth will increase by 6 points during 2021.

From a note to Morgan Stanley’s clients that landed on my desktop Tuesday: “Services strength drives estimates higher but peer multiple compression drives PT lower to $155 (from $164). Following strong March quarter App Store results and an analysis of the key drivers of Apple’s Licensing & Other segment, we raise our already above-street FY21 and FY22 Services revenue estimates by 3% and 5% respectively, and are increasingly convinced that consensus Services forecasts over the next 2+ years are too low. We now forecast Apple Services revenue growth accelerates by 6 points to +22% Y/Y in FY21, up from +19% Y/Y previously, nearly 4 points ahead of FY21 consensus Services growth of +18% Y/Y.”

UBS Upgrades AAPL, Thinks Firm Will Make Big Impact in Electric Vehicle Market

UBS analyst David Vogt upgraded AAPL to a Buy and raised the price target to US$142 from US$115, Yahoo Finance reported. This upgrade was in no small part based on the impact he thinks Apple can make in the electric vehicle market.

Our analysis of the auto market and Apple’s multi-year investment in the industry (self-driving car licenses and LiDAR patents) suggests to us Apple’s auto optionality is worth at least an incremental $14/share,” Vogt said in a research note to clients. “Apple’s current portfolio provides significant cash flow the company will likely utilize to enter the battery electric vehicle market.” Vogt says Apple can capture some of the battery electric vehicle (BEV) market given customer satisfaction is already high for the tech giant’s products. “We expect Apple’s platform strategy and market share in the global PC and smartphone markets should enable Apple to introduce a branded BEV and achieve a minimum 5% market share in the global BEV market,” he wrote. “Over the next ten years, we forecast the global automotive market will likely transition to almost 100% EV opening up a 90M unit market to new entrants with large installed bases of loyal satisfied customers like Apple.”

When AAPL Overtook Walmart

There’s been much talk in recent days, as Apple’s market cap has slipped at points to sit below the US$2 trillion mark. Cult of Mac shared a timely reminder of when AAPL first overtook Walmart stock.

At the time, AAPL was trading at $226 per share. Today, it trades at $275.43. If that doesn’t seem much of an increase, bear in mind that a 7-to-1 stock split took place in 2014 after AAPL peaked at $645. If that split hadn’t happened, Apple would now be trading at approximately $1,925. It didn’t take Apple long to catch up to market leaders ExxonMobil and Microsoft, either. In May 2010, Apple overtook Microsoft, surpassing the tech giant that dominated Cupertino during the previous decade. A little over a year after that, on August 9, 2011, Apple blew past oil giant ExxonMobil to become the world’s most valuable company. In all, it was an astonishing turnaround for a company that came perilously close to going out of business during the 1990s.