Gene Munster: Apple will beat growth expectations for years to come

Setting aside the current rotation of investors out of tech, the key question exiting Apple’s incredible second quarter is: what is the company’s true growth rate over the next few years? Investors fear that Apple pulled revenue forward, which saddled the company with difficult, if not impossible, comparisons in the years to come. Loup Venture’s Gene Munster believes that Apple will continue to grow revenue in the out years ahead of expectations.

Gene Munster: Apple will beat growth expectations

Gene Munster and David Stokman for Loup Ventures:

Here’s where Loup’s 5-year Apple model stands compared to consensus estimates.

Apple growth estimates
Source: Loup Ventures, Yahoo Finance

For FY21 we are broadly in line with consensus. The notable part about our Apple estimates relative to Street expectations is the company’s growth in FY22, FY23, and beyond. While Apple will face more difficult comps as it laps pandemic quarters in which it benefitted from people spending more time learning, working, and playing from anywhere, we believe the company will continue to grow revenue in the out years ahead of expectations, driven by a longer-than-expected tail of the accelerating digital transformation.

While we are in line with consensus for FY21 iPhone growth of 33%, we believe iPhone can grow 5% and 4% in FY22 and FY23, respectively. This compares to consensus at 2% and 1%. We believe consensus is underestimating the magnitude of a multi-year iPhone upgrade cycle that we think will last through FY23.

We think Mac and iPad revenues can grow 8% and 7% in FY22 and FY23, respectively, compared to consensus at 1% and -6% for Mac, and -1% and -4% for iPad.

We are modeling for 15% and 18% growth in WHA in FY22 and FY23, compared to consensus at 15% and 8%. The divergence from consensus for our FY23 estimate is anchored in a belief that Watch and AirPods have significant room to grow… While AirTag will not move the needle in the short term, we estimate that by 2025 the product could add $3.3B in annual revenue or about 5% to the WHA segment.

We are modeling for 15% growth in FY22 and 13% growth in FY23, compared to consensus at 15% and 10%.

MacDailyNews Take: It’s important to note that Loup Ventures’ model does not include potential new business segments related to expanded hardware subscriptions, augmented reality (AR) products, or transportation, so a great degree of headroom is built in if Apple makes any of these moves between now and fiscal year 2025.

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