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Investment bank JP Morgan sees two recent Apple-related reports as more evidence implying upside for the Mac and Services segments, even as the new iPhone cycle may be hitting seasonal headwinds.
In a note to investors seen by AppleInsider, analyst Samik Chatterjee notes that projections of an iPhone 12 "super cycle" may be running up against already high investor expectations. Despite that, the analyst says that he continues to see modest upside drivers from non-iPhone segments.
Chatterjee highlights two recent reports that he believes points toward continued growth in both the Mac and Services sector.
On Monday, Jamf announced that its software was now managing more than 20 million Apple devices for 47,000 customers.
JP Morgan estimates that this implies 1.4 million device adds in the fourth quarter of 2020, 1.4 million adds in the third quarter, 900,000 adds in the second quarter, and 600,000 adds in the first.
"The sequentially robust net device adds for JAMF could imply upside to Mac unit volume expectations for the December quarter, helped likely by strong commercial demand, with expectations for sequential volumes lowered on account of the Apple management team highlighting cycling past strong back-to-school related demand in the September quarter," Chatterjee writes.
The analyst also cites a recent app growth report from Sensor Tower as a sign that Services is continuing to build.
That report indicated that user spending on the App Store grew to an estimated $72.3 billion in 2020. The increase is about 30% year-over-year from $55.5 billion in 2019.
Chatterjee says the full-year data implies that user spending rose 40% year-over-year to $20.5 billion in the fourth quarter of 2020. That would suggest an acceleration in growth from 31% in the third quarter and 29% in the second.
In a previous research note, the analyst said that investors should expect "modest returns" on the strength of wearables, Macs, and iPad devices. He also pointed toward better than expected demand for legacy iPhone models as one reason why iPhone 12 expectation may run into headwinds.
The analyst reiterated his 12-month AAPL price target of $150, based on JP Morgan's 2022 earnings-per-share estimate of $4.90 and a blended price-to-earnings multiple of about 31x.
Shares of AAPL are priced at $131.10 as of writing, up 1.31% in intra-day trading after a tough first day of trading for 2021.
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2 Comments
I think we may be in for a multi-year Mac super cycle, in which a large fraction of the installed base accelerates upgrades to take advantage of the new ASi Macs and many folks who own iPhones or iPads (but not Macs) start buying Macs, too. Later in the cycle will come the corporate side, as more businesses go Mac, also in part because of ASi.
These are amazingly exciting times to be a Mac fan!
(oh, and btw, to all the people who predicted the death of the Mac ---- :-p )