Apple, Inc. AAPL launched a slew of hardware products at its “Far Out” event held on Wednesday.
Apple’s fall iPhone event stuck to its “playbook for success’ — taking a loved product, adding features, and refining its look while maintaining the price point, Loup Funds’ Gene Munster said in a note.
Even though one of the iPhone variants won’t arrive until October, the newly announced iPhones, Watches and AirPods will be sufficient to exceed expectations for the fourth quarter, ending in September, he added.
“Looking to FY23, I believe there were enough announcements for the company to slightly exceed the consensus estimate of 5% revenue growth,” the venture capitalist said.
What Happened: Munster says he is impressed with Apple’s continuous efforts to discover new features that could open up new markets. He emphasized the three-day battery life of the new Watch, which will likely appeal to those who don’t like charging their devices every day.
The satellite feature of the new iPhone 14 will help users feel safe, as it allows emergency messaging, even in areas with no mobile connection, he noted.
According to Munster, Apple’s hardware dominance makes these refinements possible.
When It's Important: According to Munster, as Apple’s core business grows, it will likely give the company the wherewithal for entering new markets such as wearables, health, or auto. In his opinion, the auto industry offers the greatest opportunity, with the potential to generate more than one-third of Apple’s revenue over the next decade. Updates on progress in these segments are expected in the coming months, likely moving the stock higher, he added.
Apple’s decision to keep the prices of all its new devices at last year’s levels, although surprising, could prove positive for revenue but neutral to earnings, said Munster.
Apple should be able to maintain margins despite input cost inflation, given the company’s history of sustaining margins at 43% in the past year despite across-the-board increases in the cost of some components, shipping, and salaries, added Munster.
Price Action: Apple shares closed Wednesday’s session up 0.93% at $155.96, according to Benzinga Pro data. In premarket trading on Thursday, the stock was seen slipping 0.20% to $155.65.
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