“Shares of Apple (AAPL) are up 69 cents, or 0.6%, at $110.49, in pre-market trading, after Needham & Co.’s Laura Martin this morning initiated coverage of the stock with a Strong Buy recommendation, in a sense taking over for the late, great Charlie Wolf, who passed away in 2014 after many years covering the stock,” Tiernan Ray reports for Barron’s. “Martin assigns a $150 price target.”
Ray reports. “Martin deems Apple an ‘arms dealer’ to ‘the wealthiest’ consumers in a world where consumers are ‘creating a new global distribution network over connected mobile devices.'”
Part of AAPL’s valuation discount is because Apple is valued as if each of its device launches is a stand-alone product, with no credit for lower risk or predictable track record owing to its previously established fan base. We respectfully disagree. We think Apple is more like Harry Potter than Pixar. Our analysis follows… In an industry where hits are hard to create, and investments often top $100MM per film, Pixar does it the hardest way possible, launching new titles most of the time… [for Harry Potter] The upside remained intact while the risk of making sequels in a single franchise was far lower (as evidenced by minimal volatility compared to Pixar) because consumers had an affinity for the brand before each sequel was released. This is true of Apple device releases as well. There is much familiarity and anticipation that lowers risk and implies consistent demand for any device Apple releases. — Laura Martin, Needham & Co.
Read more in the full article here.
MacDailyNews Take: Exactly. Plus, Apple can also be like Pixar, launching all-new blockbusters as technology advances and allows (Apple II, Mac, OS X, iPod, iTunes, iPhone, iPad, Apple Watch, etc.).