Macquarie's Take On The Apple TV

• Shares of Apple Inc. AAPL have declined 1.48 percent year-to-date.
• Macquarie’s Ben Schachter has maintained an Outperform rating and price target of $140.
• Recent news reports indicate that the new Apple TV will have enhanced capabilities for gaming, apps and voice interactions.

According to the Macquarie report, the updated Apple TV “will include upgraded hardware, dedicated App Store, and wireless gaming controller support.”

“We believe the new capabilities will increase the market potential for AAPL’s increasingly important App Store as well as its longer-term position for what we expect will be a booming in-home IOT market,” the report added.

While Schachter expects the new Apple TV to drive new market opportunities for the App Store, there have also been reports that Apple is exploring the production of original video content. In fact, Schachter believes that the potential of the App Store, “as the highest margin and fastest growing AAPL business,” is being underappreciated by investors.

“While we don’t expect the current version to attract a lot of core gamers (yet), for family entertainment/casual gaming, the Apple TV App Store could generate new revenue streams for the established publishers,” Schachter stated.

In future, when network speeds increase, cloud gaming improves and new services and hardware in launched in the market, Schachter believes that Apple will gain the opportunity to expand beyond casual gamers and address the core gaming audience.