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Apple is unlikely to see a significant impact on its 2022 growth, despite macroeconomic challenges in the June quarter, according to investment bank Wedbush.
In a note to investors seen by AppleInsiderWedbush chief analyst Daniel Ives gave some thoughts on Apple’s June quarterly performance, as well as how the company’s outlook for the 2022 calendar year is shaping up.
Ives said the main focus of conversation between Apple investors is the reported $ 4 billion to $ 8 billion hit that Apple predicted due to Covid-19 restrictions in China in Q3 2022.
The supply situation in China seems to be improving over the past few weeks, Ives said. Despite the various supply chain issues plaguing Apple and the industry, the analyst believes that demand for iPhone remains steady despite the fears.
Still, the June quarter is likely to be affected. Ives said investors should look ahead to the iPhone 14 in the fall, which he believes will launch with shipments flat or slightly higher than the iPhone 13.
Despite macroeconomic conditions, Apple’s keys to surviving the storm may be its installed base and services.
Among current iPhone owners, Ives estimates that $ 240 million has not been upgraded to a new smartphone in 3.5 years, representing untapped growth. The analyst also says that Services can grow at a steady “double cut” until 2023 and contribute about $ 80 billion in annual revenue by 2022.
“While the nervous market background creates a frightening environment for technology stocks, we believe that Apple’s growth story remains well intact despite the shaky macro,” he writes.
Ives maintains its superior performance rating for Apple and a $ 200 12-month price target. Its target is based on a sum-of-the-parts valuation on its estimates for 2022, which breaks down to an 18x multiple on Services at $ 1.5 trillion and a 7x multiple on Apple’s hardware business at $ 2.1 trillion.