BofA Forecasts Apple’s iPad Sales Growth to Decline from Covid Pull-Forward
Bank of America analysts reiterated a Neutral rating and a $160 per share price target on the Apple (NASDAQ:AAPL) stock.
The firm’s analysts analysed the “distortive impact” that the Covid-19 pandemic had on tablet demand. They estimate that almost 42 million “excess” iPads were sold during 18 months to June-end 2022.
Apple sold in total 154 million iPads during that period with the “excess” portion being partially a result of new demand, but also due to customers replacing their devices faster to support remote work/study trends.
“The excess purchases represent about ~27% of cumulative iPads sold during that time period. In our view, a quarter of the incremental sales are linked to quicker replacements, which we expect to result in y/y declines in iPad units shipped in C22 and C23. However, as some of the new customers begin to replace iPads purchased during the early legs of covid, we expect C24 to see a rebound in units shipped to above pre-covid sales levels of mid-40mn,” analysts told clients in a note.
BofA analysts revised the 22-F24 iPad revenue estimates to incorporate the results of the new analysis. They now sit below consensus and calculate that iPad revenue cuts equate to an EPS impact of -$0.01/-$0.06/-$0.07 for F22/F23/F24, respectively.
Still, they expect the iPad to continue gaining market share as Apple introduces new features and expands its customer base in the enterprise and education segment. However, while Apple will gain a new share it will likely see limited installed base growth.
“Although the device continues to attract a high proportion of new users (~50% of purchasers in any qtr. even pre-pandemic were new to the device), replacement rates remain muted. We see this as a function of the category being in structural decline,” the analysts added.
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