Bank Of America Weighs In On Apple's Acquisition Of Beats Electronics

In a note released Thursday, Bank of America analyst Scott Craig provided insight into the firm's position on the deal between
Apple
AAPL
and Beats Electronics. In light of this deal, Bank of America has maintained a Neutral rating, but raised its price objective from $615 to $650 based on a higher earnings multiple. Craig wrote, "While there are some positives to the deal, the deal seems to be out of line with Apple's history of acquisitions of technology, and we struggle to see the value." Additionally, Craig noted that the relatively new streaming music service, Beats Music, by Beats Electronics has a "very small subscriber base" and believes the $3 billion price tag may be a little much given Carlyle Group's 2013 valuation of ~$1 billion. In addition to Beats Music, Apple will also be entitled to Beats Electronics high-end headphones, which he noted account for 27 percent of the overall headphone market and 57 percent of the premium headphone market ($99+). The street has not shown a big reaction to the news in the pre-market session, as the stock was up under one percent at last check.

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