Bank of America (BofA) analyst Wamsi Mohan maintained a Buy rating on Apple Inc AAPL with a price target of $225.
After testing the Vision Pro, Mohan reacted positively to the highly unique and immersive experience but also noted the typical hurdles most first-generation products face – weight and battery life.
Mohan expects the spatial computing paradigm to lead to the development of numerous apps over time, which can drive increased use cases.
Based on his assumptions, the Vision Pro hardware is estimated to add 46 cents per share to EPS over the next five years.
He also built out the Vision Pro installed base from the Mac installed base, giving similar affordability levels.
Using conservative assumptions, Mohan anticipates visionOS-based apps to contribute 22-43 cents per share to EPS over the next five years.
Overall, the analyst estimates that the 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.
Mohan highlighted that apps leveraging the immersive nature of Vision Pro and offering a differentiated experience will be among the most popular.
Examples include front-row views of sports or concerts, live streaming, immersive video conferencing, and personalized workouts with an interactive trainer in a virtual environment.
The AR features of Vision Pro are also expected to 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 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