has rallied this year, helped by strong iPhone demand and anticipation about Apple TV+.
says the tech giant is making smart moves—but must still navigate a world of ever-increasing competition.
The back story. Apple shares (ticker: AAPL) have soared more than 49% in 2019, more than double the
gains of 19.5%. Investors have been heartened by strong demand for the iPhone 11, as well as optimism about the company’s coming launch of streaming service Apple TV+. That allowed Apple to edge out
(MSFT) as the world’s most valuable public company earlier this month.
What’s new. Barclays analyst Tim Long takes a look at how the new iPhones and Apple TV+ will impact the company. Apple says it will now offer one year of free TV+ service to consumers that buy a new phone, which essentially shifts about $60 a year per customer out of the company’s hardware revenue and into its services division.
That may not sound like a big deal. But in a report released Thursday, Long writes that the shift of about $7.5 billion in revenue is a positive move. The company is looking to transform its business model and shift more toward services, he notes, which have the advantage of being able to command more recurring revenue.
Looking ahead. Long raised his price target on Apple to $224 from $207, and he boosted his estimates for iPhone sales for fiscal 2019 and 2020, given more robust demand (driven in part by lower prices in China).
That said, he also reiterated an Equal Weight rating on the shares. Despite the company’s sticky ecosystem, and the increasing success of new divisions like services and wearables, he’s not sure that iPhone upgrade demand will be able to keep pace with investor expectations going forward, given increasing competition from other premium smartphones (and higher prices).
Apple stock is up 0.3% to $235.88 in recent, while the S&P 500 is flat.
Write to Teresa Rivas at firstname.lastname@example.org