“Jefferies initiated coverage of Apple’s stock with a buy rating on Monday, estimating the tech giant can build ‘a massive’ services business on its core iPhone business,” Michael Sheetz reports for CNBC. “‘We believe AAPL’s stable iPhone business will serve as the foundation upon which it can build a massive, recurring and high margin Services business,’ Jefferies analyst Timothy O’Shea said in a note.”

“O’Shea said the firm believes the services business could make up 25 percent of Apple’s revenue by fiscal year 2020, as well as 40 percent of the company’s gross profit,” Sheetz reports. “‘Applying a higher multiple compared to the lower margin hardware business, we see a significant opportunity for investors as Services alone could be worth $111 to $177 per share by that time,’ O’Shea said.”

Read more in the full article here.

MacDailyNews Take: Jeffries’ O’Shea gets it.

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