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Apple To See Revenue Growth Ahead Of Street Expectations Through 2025, Munster Estimates: What You Need To Know

May 13, 2021 7:06 am
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Apple To See Revenue Growth Ahead Of Street Expectations Through 2025, Munster Estimates: What You Need To Know

Apple Inc (NASDAQ:AAPL) will continue to grow ahead of Wall Street’s expectations from the fiscal year 2022 onwards, Loup Ventures Managing Partner Gene Munster said on Thursday.

Beating Street Expectations: The Cupertino-based tech giant will face more difficult comps as it emerges from the pandemic but will continue to grow revenue ahead of expectations — helped by accelerating digital transformation, Munster wrote in a note.

Munster estimates Apple’s 2021 revenue to grow at 28%, in line with analyst consensus. The analyst expects the maker of iPhones and iPads’ revenue growth to slow down to 8% for both 2022 and 2023 respectively, which would still be well ahead of the industry consensus of 4% annual revenue growth. 

For the remaining two years, Munster expects Apple to maintain a 6% revenue growth annually.

Product Brakedown: iPhone, which generates over half of the company’s sales,  is expected to grow at 33% in 2021 and those of Mac and Ipads to be 18% and 26% respectively in 2021, Munster noted.

However, Macbooks and iPads sales growth rates will surpass those of iPhones in 2022, the analyst estimates. 

Munster expects Mac and iPad revenues to grow 8%, 7%, 6%, and 4% in fiscal year 2022, 2023, 2024 and 2025, respectively. In contrast, Munster estimates iPhone sales to grow 5%, 4%, 2% and 2% respectively. 

On iPhones, Munster believes the street is underestimating the multi-year iPhone upgrade cycle that will last through FY23 and only accelerate with the 5G rollout, which is currently limited in the U.S. but will turn into a “must-have” feature once more carriers roll out expansions.

See Also: Why Analyst Sees AirTags As A $10B Opportunity For Apple

On Mac and iPad, he believes the work and learn-from-anywhere transformation will continue to benefit these product lines for the next three years plus, as employees, students, and organizations settle into the new hybrid paradigm.

Standing Among Peers: The veteran Apple analyst estimates Apple’s revenue growth rate outlook to be lower than its FAANG peers. Munster estimates Facebook Inc (NASDAQ:FB), Amazon.com Inc (NASDAQ:AMZN), Alphabet Inc (NASDAQ:GOOGL), and Netflix Inc (NASDAQ:NFLX) to grow revenue in double-digits in 2022 in the 15% to 19% range.

What Could Go Wrong: Munster however warned he could be overestimating the unfolding digital transformation that could result in a step-down in Apple's growth rates.

Further, the App Store service, Apple’s second-largest revenue-generating unit, could face a 20% headwind if Apple is forced to reduce its cut in half from 30% to 15% in light of legal action in the U.S. and the European Union.

Price Action: Apple shares traded 0.4% lower at $122.2 in the pre-market session Wednesday.

Read Next: Apple Acquires A Company Every 3-4 Weeks. How Does It Go About Making Those Purchases?

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