Apple's Latest Marvel, Vision Pro, Receives Analyst Thumbs Up for Earnings Impact

BofA analyst Wamsi Mohan maintained a Buy rating on Apple Inc AAPL with a price target of $225.

The analyst tested the Vision Pro and reacted positively to the highly unique and immersive experience.

However, he also noted that the typical hurdles most first-generation products face also hold for the Vision Pro (weight and battery life).

The spatial computing paradigm is unique and expects developers to unleash numerous apps to drive increased use cases over time.

Based on his assumptions, the Vision Pro hardware can add 46 cents per share to EPS over the next five years. 

Mohan built out the Vision Pro installed base from the Mac installed base, giving similar affordability levels. 

Using conservative assumptions, he expects visionOS-based apps to add 22-43 cents per share to EPS over the next five years. 

The analyst estimates Vision Pro can add 68-89 cents per share to EPS over the next five years. 

The re-rating reflected a multi-year iPhone cycle driven by generative AI, strong services growth, and margin expansion.

The analyst flagged that apps that leverage the immersive nature of Vision Pro and offer a differentiated experience will be among the most popular ones. 

Examples are front-row views of sports or concerts, live streaming, immersive video conferencing, and personalized workouts with an interactive trainer in a virtual environment. 

Vision Pro’s AR features can also be a valuable tool for e-commerce as customers can try on new clothing items or visualize new furniture products in their homes.

Mohan also emphasized the key apps like Netflix Inc NFLX, Alphabet Inc GOOG GOOGL YouTube, and Spotify Technology SPOT missing from VisionOS at launch.

Mohan projects FY24 sales of $396.24 billion (versus consensus of $390.6 billion) and EPS of $6.70 (versus consensus of $6.54).

Price Action: AAPL shares traded higher by 1.60% at $188.83 on the last check Monday.

Photo: Courtesy Apple