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Apple (AAPL) Expands Portfolio With Redesigned & Next-Gen iPads

Zacks Equity Research
·4-min read

Apple AAPL is expanding its product lineup with the introduction of a redesigned iPad and next-gen iPad Pro.

The redesigned iPad features a large 10.9-inch Liquid Retina display and is powered by an A14 Bionic chip that is 5 times faster than the best-selling Android tablet and 3 times fasters than the iPad (7th generation).

The device offers an Ultra-Wide 12MP front camera located along the landscape edge of the iPad and an updated 12MP back camera to capture sharp, vivid photos and 4K video. The latest iPad comprises a USB-C port that supports a wide range of accessories. It also supports Wi-Fi 6 and 5G.

The new iPad will be available beginning Oct 26 at stores and will cost $449 for the Wi-Fi model and $599 for the Wi-Fi plus cellular model.

Apple also introduced iPadOS 16, which offers new features in Messages like editing or recovering recently deleted messages, and marking conversations as unread. It introduces Freeform, a new productivity app and a host of other features.

Apple Inc. Price and Consensus

Apple Inc. Price and Consensus
Apple Inc. Price and Consensus

Apple Inc. price-consensus-chart | Apple Inc. Quote

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Meanwhile, the next-gen iPad Pro is powered by the M2 chip and features a next-level Apple Pencil hover experience. Other features include fastest Wi-Fi connections with support for Wi-Fi 6E and Wi-Fi plus Cellular models supporting 5G.

M2, which is 15% faster than M1, features an 8-core CPU and a 10-core GPU, which delivers up to 35% faster graphics performance for the most demanding users. The 16-core Neural engine, along with this combination, can process 15.8 trillion operations per second, 40% more than the M1, making the iPad Pro even more powerful in handling machine learning tasks.

Prospects Suffer Due to Lower iPhone Demand

Apple’s prospects are expected to suffer from lower demand for iPhone. Reportedly, the company has asked its suppliers to reduce production by roughly six million units in the second half of this year.

Apple now targets to ship approximately 90 million iPhones during this period, unchanged year over year and on par with its original expectation. The company had expected to ship roughly 220 million iPhones in 2022, similar to 2021.

Apple has been struggling in 2022, primarily due to supply-chain disruptions, industry-wide silicon shortage, unfavorable forex and the Russia-Ukraine conflict.

The near-term outlook is not enthusiastic, given the headwinds. Apple did not provide revenue guidance for third-quarter fiscal 2022. Apple expects COVID-induced supply chain disruptions and the industry-wide silicon shortage to hurt its top line by $4-$8 billion. Unfavorable forex is also expected to hurt revenues by 300 basis points (bps).

Moreover, the absence of revenues from Russia is expected to hurt the top line by 150 bps. Apple paused all sales in Russia during the fiscal second quarter (March quarter).

Overall, on a year-to-date basis, Apple shares have declined 18.7%, while the Zacks Computer & Technology sector declined 35.6% over the same time frame.

Zacks Rank & Upcoming Earnings to Watch

Apple, which currently has a Zacks Rank #3 (Hold), is set to report its fourth-quarter fiscal 2022 results on Oct 27.

Some better-ranked stocks from the broader sector are F5 FFIV, National Instruments NATI and Simulations SLP, all three sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

F5 is set to report its fourth-quarter fiscal 2022 results on Oct 25. The company’s shares have declined 41% in the year-to-date period. The Zacks Consensus Estimate for FFIV’s fiscal 2022 earnings has been unchanged over the past 30 days to $10.13 per share.

National Instruments is scheduled to report its third-quarter 2022 results on Oct 27. NATI shares have declined 9.8% in the year-to-date period. The Zacks Consensus Estimate for NATI’s 2022 earnings has been steady over the past 30 days at $2.07 per share.

Simulations is scheduled to report its fourth-quarter fiscal 2022 results on Oct 26. SLP shares have increased 2% in the year-to-date period. The Zacks Consensus Estimate for SLP’s fiscal 2022 earnings has been steady over the past 30 days at 9 cents per share.


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