Apple (NASDAQ:AAPL) shares dipped slightly on Thursday even as Bank of America analyst Wamsi Mohan raised his estimates for iPhone sales, and said he may have been too conservative with his earlier forecasts
Mohan left his buy rating on Apple (AAPL) unchanged, but lowered his price target to $200 a share from $215 and said that the company’s iPhone installed base is a “key indicator” for its overall ecosystem. Mohan said that with an installed base of more than 1.8 billion devices, it’s likely that more revenue from Apple’s (AAPL) services business will follow.
“Our [installed base] analysis indicates to us that our prior iPhone estimates may be too conservative,” Mohan said in a research note. As such, Mohan raised his iPhone shipment estimates to 237 million units from 231 million for Apple’s (AAPL) 2023 fiscal year, and to 230 million from 222 million for the company’s 2024 fiscal year.
In addition, Mohan noted that growth from China is still key, as it accounted for roughly 20% of the iPhone installed base and is the same size as the European iPhone market. Mohan forecasts Apple’s (AAPL) installed base in China to grow at a 5% compound annual growth rate from 2021 to 2026. By contrast, Mohan sees US iPhone growth in the low-single-digit range, and growth of about 2% on year -over-year basis in Europe
Mohan added that with Apple (AAPL) having almost 2 billion devices in use worldwide, and more than 825 million paid subscriptions, it’s likely that there is “room for significant further penetration of services in the [installed base]” that should help it forego the fate that happened to Nokia (NOK), BlackBerry (BB) and other once dominant mobile-phone companies that faded over time.
On Tuesday, it was reported that Apple (AAPL) postponed its plan to have its employees return to the office three times per week, citing rising COVID cases across the country.