Munster Still Likes Apple Even As Peers Downgrade

Apple Inc. AAPL investors were indecisive in their interpretation of first-quarter results. Shares plunged, spiked and resettled after-hours as traders digested top- and bottom-line beats muddied by a 1-percent drop in iPhone units.

One Apple expert warned not to overthink it.

The Thesis

Loup Ventures managing partner Gene Munster attributed the positive reversal to recognition of an expanding active device base now recording 1.3 billion active devices and 240 million Services subscribers.

“Herein lies Apple’s long-term opportunity: a growing active device base coupled with increasing revenue per device,” he wrote in a Friday blog post.

The iPhone X consistently topped iPhone sales to drive a 15-percent year-over-year increase in average-selling-price, a factor offsetting a 3.4-percent iPhone sales miss.

“We were wrong; Apple didn’t nail the 2017 iPhone launches,” Munster said. “We think it was partly due to the more complex buying decision between iPhone 8 and iPhone X and partly due to the iPhone X’s limited availability in the quarter.”

The analyst expects Apple to compensate for the decline in Services revenue, which he expects to double between 2016 and 2020.

Price Action

At time of publication, Apple was down 2.4 percent at $163.87. Munster will be on a special 1 p.m. ET edition of PreMarket Prep to break down Apple, Amazon, and Alphabet's earnings.

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