Jefferies analyst Kyle McNealy sees two main drivers behind higher revenue and earnings estimates for Apple: New product launches and a breakout year for the company’s wearables business which includes AirPods and Apple Watch.
“We see fiscal 2020 as a breakout year for Apple’s Wearables business,” wrote Jefferies analyst Kyle McNealy in a note. “Multiple 2019 product launches, potential average selling price expansion from AirPods Pro, and strong customer interest across product lines support our view that 2020 will be a meaningful inflection point for the business.”
McNealy said he’s looking for Wearables to contribute 3% to 4% of total company growth for 2020 and 2021, although he didn’t specify if he meant revenue or earnings growth… McNealy says wearables have reached scale and that AirPods and Apple Watches can contribute 3% and 1%, respectively, to total revenue in 2020.
McNealy raised his 2020 EPS estimate to $14.25 from $14.15 and his 2021 EPS estimate to $16.45 from $16.20. His price target is $370.
MacDailyNews Take: Apple Watch may well contribute even more than 1% to total revenue in calendar 2020.