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

Apple Inc 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.

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 estimatesFacebook IncFB,Amazon.com IncAMZN,Alphabet IncGOOGL, andNetflix IncNFLXto 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 oflegal 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.