Wolfe Research Highlights Surprises From Apple's (AAPL) "Spring Loaded" Event, Reiterates Underperform

Wolfe Research analyst Jeff Kvaal reiterated an Underperform rating and $115.00 price target on Apple (NASDAQ: AAPL) noting the company's event was general as expected but included a few surprise additions and omissions.

Surprise #1: 24” iMac is the first with M1. Earlier than expected considering the prior update was last August. Apple touted the 11.5mm depth, the 4.5K retina display, 1080p camera, and seven color palette. The iMac starts at $1299, an ASP between its 21.5” and 27” predecessors.

Surprise #2: The expected iPad Pro refresh included M1 silicon, supplanting A-series chips. Might the iPhone be next?

Surprise #3: AirTags / ESG were a focus, not AirPods/iOS 14.5. Apple launched the long awaited
AirTags location hardware to keep track of everyday items in the Find My app.

Surprise #4: A new purple iPhone color was unveiled, the first standalone off-cycle iPhone product launch in memory.

The analyst summarized his conclusion stating "M1 expansion not new products is our key positive takeaway." The analyst also reiterated the Underperform rating, stating "Throughout the pandemic, Apple has blown away its consensus estimates. Despite these strong results, Apple has underperformed the market by ~10% year to date. Apple has benefitted from FX tailwinds, as well as a robust sales mix of higher tier phones. Residual strength in the iPhone Pro and Pro Max due to channel inventory fill should ease heading into F3Q. Additionally, the Mac, iPad, and Services segments face stiff compares as Apple circles onto its first full quarter of pandemic comps. According to our Sensor Tower data, App Store revenue growth has already slowed from its post-pandemic rate of 30% to 25% in March. In our view, material upward revisions to consensus seem unlikely. We maintain our $115 price target and Underperform rating, apprehensive of the expectations embedded in Apples high multiple."

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $132.70 yesterday.

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