Skip to Content
Stock Analyst Update

Apple’s Mac and iPad Sales Remain Bolstered in Q4

We are raising our fair value estimate for narrow-moat Apple to $85 per share from $71 as we incorporate a stronger near-term outlook for the Mac and iPad segments due to ongoing work- and learning-from-home dynamics.


Apple (AAPL) reported fiscal fourth-quarter results ahead of our expectations led by Mac and iPad segments. The firm did not provide guidance the last two quarters and again refrained from offering specific guidance due to uncertainty regarding COVID-19. CEO Tim Cook expects iPhone revenue to grow in the December quarter despite the new iPhone 12 being launched a couple of weeks later in the quarter, though he did not specify the magnitude of growth. Meanwhile, all other products and services are expected to grow in the double digits.

We are raising our fair value estimate for narrow-moat Apple to $85 per share from $71 as we incorporate a stronger near-term outlook for the Mac and iPad segments due to ongoing work- and learning-from-home dynamics. Nonetheless, we think shares are currently overvalued, as we think recent growth trends could be unsustainable as we enter 2021.

Fourth-quarter revenue was up 1% year over year thanks to growth in iPad (46%), Mac (29%), services (16%), and wearables, home, and accessories (21%). Management noted the iPad and Mac segments remained supply constrained, which bodes well for these business lines in the December quarter. Apple’s iPhone sales were understandably down 21% year over year due to the iPhone 12 delay. Apple now has over 585 million paid subscribers to its various services, up 135 million from a year ago, and the firm expects 600 million subs by Dec 2020. Although Greater China was the region most impacted by the absence of the new iPhones for the quarter (total revenue down 29% year over year), non-iPhone sales grew double digits. Gross margin of 38.2% was up 20 basis points sequentially due to a higher mix of services.

Management was optimistic revenue from Greater China would grow in the first quarter, particularly as 5G is more mature in the region. We anticipate iPhone revenue for fiscal 2021 will be up in the low teens, though the late launch may shift some sales from the December quarter to the March quarter.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Abhinav Davuluri does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.