BofA analyst Wamsi Mohan maintained a Buy rating on Apple Inc (NASDAQ:AAPL) with a price target of $225.
Mohan noted that historically, Apple investors have tended to look at existing products and the profitability associated with those products and services to measure the company’s future performance.
He went back to 2018 to see where the 2023 consensus gross margins were in 2018.
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The Street was modeling fiscal 2023 gross margins for Apple at 39%, but Apple printed 44% gross margins, significantly exceeding (500bps) original expectations.
Mohan noted that the Street continues to underestimate Apple’s long-term gross margin potential across both products and Services yet again.
He emphasized about 180bps of Product gross margin upside and about 150bps of Services margin upside over the next few years.
He noted that Apple’s ...