Skip to Content
Stock Analyst Update

Apple Launches New Watch and iPad at Annual Event

We recommend prospective investors wait for a wider margin of safety before investing in Apple.

Mentioned:

On Sept. 15, Apple (AAPL) held its annual product showcase where it announced the launch of a new Apple Watch and iPad. The iPhone was notably absent from the event, as COVID-19-related delays have pushed back the launch of Apple’s crown jewel to October. On the services front, the firm detailed its Apple One offering that bundles iCloud, Apple Music, TV+, Arcade, News+, and Fitness+ for $29.95 per month (and a skinnier version without Fitness and News at $14.95). We expect the firm to continue pushing the “as-a-service” model for both its products and software to solidify its recurring revenue streams. Our fair value estimate remains $71 per share for the firm. While narrow-moat Apple remains well positioned in the near term given the upcoming 5G iPhone and stronger outlook for Mac and iPad segments due to the ongoing work- and learning-from-home dynamics, we recommend prospective investors wait for a wider margin of safety before investing in Apple.

The Apple Watch Series 6 was the first product discussed, with the most noteworthy feature being its ability to measure blood oxygen levels using both red and infrared light. The new watch includes a new S6 processor with up to 20% faster performance relative to the prior generation. The price point is the same as the last variant: starting at $399 with the cellular model at $499. Similar to the cheaper iPhone SE, Apple also announced an Apple Watch SE starting at $279. We expect these new products to help Apple sustain its recent stretch of double-digit wearables growth.

On the iPad front, the firm updated its entry-level variant starting at $329 as well as the iPad Air with its latest A14 Bionic processor (made on TSMC’s 5-nanometer process) and starting at $599. In addition to the normal performance hike (40% from prior generation), Apple is also embracing USB-C for its charge port (similar to the iPad Pro).

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 shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.