Apple Installed Base Now Exceeds 1.8 Billion - BofA

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Apple Installed Base Now Exceeds 1.8 Billion - BofA
Credit: © Reuters.

By Senad Karaahmetovic

Bank of America analyst Wamsi Mohan cut the price target on Apple (NASDAQ: AAPL ) to $200.00 per share from the prior $215.00 to reflect increased macro and supply chain headwinds.

Still, the analyst remains bullish on Apple as BofA’s analysis showed the iPhone installed base is over 1 billion units with an overall installed base estimated at north of 1.8 billion for the entire Apple ecosystem.

“The hardware IB is the platform on which Apple builds and grows its services business. We highlight the following: (1) size of the global iPhone IB of about 1.1bn units at the end of 2021 (about 760mn primary and 320mn in the used iPhone IB), (2) the used iPhone IB has been growing faster than the new iPhone IB albeit off a smaller base (2017-21 CAGR of 17% vs. 3%), and we expect the higher growth rate to continue (2021-26 CAGR of 15% vs. 2%), (3) a larger IB can eventually drive higher consumption of services and sales of incremental devices (halo effect), (4) the iPhone IB in China has been growing faster than other regions, and we expect that to continue, and (5) secondary market growth presents a large services opportunity,” Mohan explained in a note.

As a result, the analyst hiked the F23/F24 iPhone unit estimates to 237mn/230mn from 231mn/222mn, respectively.

Region-wise, China has now caught up with Europe with the country’s installed base expected to grow at 5% CAGR 2021-2026, much faster than 1% and 2% in North America and Europe, respectively.

“Investors have worried of longevity of technology dominance for smartphones (often comparing with Nokia (NYSE: NOK ), Blackberry (TSX: BB ), Motorola (NYSE: MSI ) etc.). Our IB analysis gives us confidence that combination of replacement and new users can drive annual iPhone sales of 230mn units, which combined with a growing services business can drive a premium multiple,” Mohan concluded.


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