App Store, Macs, Apple Watch, Apple Pay Will Eventually Become Bigger Focus For Investors, Macquarie Predicts

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In a report published Tuesday, Macquarie analyst Ben Schachter maintained an Outperform rating on
Apple Inc.
AAPL
, with a price target of $155, ahead of the company's 2Q results. Analyst Ben Schachter expects Apple to record iPhone 6 sales higher than the 47mn unit estimate. The comp issue is likely to become "a much more significant issue" during the September and December quarters. Schachter explained that demand for a larger screen had driven "much of the incredible growth" in iPhone units over the past year. However, since the new phone would not be a size upgrade, "we are concerned that the growth simply won't be there." In the report Macquarie noted, "…once we get past the first full quarter of iPhone 6 comps, we think investors will become more focused on what else matters for the stock. If we assume that the next iteration of the iPhone is only up slightly, then we think things like the App Store, Macs, Apple Watch, Apple Pay, etc…will become more of a focus for investors." Schachter believes that the App Store is "widely underappreciated" as a driver of operating income growth "over the next few years and beyond." Schachter also expects the Services line to drive more than 100 percent of operating income growth between FY16 and FY20, and account for more than 30 percent of Apple's operating income by 2020.
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Posted In: Analyst ColorReiterationAnalyst RatingsMacquarie
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