How's Wall Street Reacting To Day One At WWDC?
Apple Inc. (NASDAQ: AAPL) began its week-long annual Worldwide Developers Conference on Monday.
Here is what some of Wall Street's top analysts are saying on Tuesday.
FBR: Streaming Music ‘Front And Center'
Daniel Ives commented in a note that so far there have been no "major" surprises and noted Monday's presentation heavily focused on software/services. This will help lay the groundwork for Apple's "next leg of growth" in software, Watch and Apple Pay product categories.
Ives pointed that the overall focus of the conference has been centered around the "much anticipated" streaming music service (Apple Music) which will help build a "moat around the all-important iTunes franchise." The analyst stated that the streaming music announcement is "the tip of the iceberg" as the company embarks further down the software/streaming services path of the coming years to expand on the "massive" market opportunity.
Bottom line, Apple's next-generation product ideas will help the company "expand its consumer tentacles" over the coming years.
Shares remain Outperform rated with an unchanged $185 price target.
Wells Fargo: Largely As Expected
Maynard Um commented in a note that there were no surprise during the keynote presentation with no new hardware or Apple TV related announcement.
According to the analyst, the most important announcement was the open sourcing of the Swift programming language, although this is unlikely to yield an immediate benefit to Apple.
Um also commented on the new split screen feature in iOS and Mac OS as being a "useful tool" for enterprise customers though it is unlikely to drive incremental sales. Commenting on Apple's new streaming service, the analyst suggested that the company is looking to revamp its music business in a competitive marketplace.
Bottom line, Um stated that the most important fact for Apple's growth is its next iPhone cycle.
Shares remain Market Perform rated with an unchanged valuation range of $125 to $135.
Morgan Stanley: Bull Case Reinforced
Katy Huberty commented in a note several helpful data points reinforced a bullish stance.
- Jimmy Iovine referenced a nearly one billion user base, which suggests an increase from 800 million in April and 500 million in January 2013.
- Apple Pay is now available in one million locations, up from 700,000 on March 9, implying a consistent run-rate of new locations.
- Apple recently hit a milestone of 100 billion app downloads with $30 billion in payments, implying a consistent app download-rate with accelerating monetization.
Bottom line, the key data points reinforced the analyst's thesis that 20 percent of Apple's profits will come from Services by 2017 as monetization of the user base continues to improve. In addition, Apple Music alone could account for 5 percent of fiscal 2016 revenue and 2 percent of earnings per share.
Shares remain Overweight rated with an unchanged $166 price target.
Brean Capital: Key Features For Music, Watch & Pay Can Be ‘Quite Material'
Ananda Baruah discussed Apple's new music service, Watch updates and Apple Pay.
First, Baruah noted that Apple's new streaming music "importantly" combines the features of Soundcloud, Ping, Spotify and Pandora Media Inc (NYSE: P) into one.
Baruah also stated that he "loves" the fact that just six weeks post-Watch availability, Apple is already introducing "serious" enhancements. App logic can now run on the Watch itself, compared to keeping it on the iPhone and this will be "big" moving forward in creating new apps for the Watch.
Finally, key new features on Apple Pay, according to the analyst, includes the expansion to the United Kingdom next month. Also, Apple's announcement that Apple Pay will begin honoring retailer credit cards and loyalty cards with a handful of retail partners already announced.
Bottom line, despite new features to iOS9, the El Capitan announcement and other features, Music, Watch and Apple Pay deserve the most focus.
Shares remain Buy rated with an unchanged $170 price target.
Latest Ratings for AAPL
|Oct 2016||Credit Suisse||Maintains||Outperform|
|Oct 2016||Goldman Sachs||Maintains||Buy|
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