Jefferies: Apple stock will rally thanks to surge in services revenue

“Jefferies believes Apple stock is undervalued after its recent drop over the past two months,” Tae Kim reports for Barron’s. “The firm’s analyst Timothy O’Shea reiterated his Buy rating for the smartphone maker’s shares, citing the company’s potential to grow its services businesses. ‘While we are reducing iPhone and EPS ests for F’19, Apple’s iPhone business still looks sufficient to build a massive, high margin, high multiple Services business over time,’ he wrote on Wednesday.”

“The analyst is bullish over Apple’s services segment, which includes its App Store, iCloud, Apple Music and Apple Pay businesses. He predicts the company’s App Store revenue will rise to more than $32 billion in five years from just $13 billion this year,” Kim reports. “‘The opportunity for investors is that these higher-margin, higher-growth software businesses deserve a higher multiple vs the lower margin, lower growth hardware business,’ he wrote… The analyst also lowered his price target to $225 from $265 for Apple’s stock. Still, the reduced price target implies about 36% upside.”

Read more in the full article here.

MacDailyNews Take: Someday, it’d be nice to see Apple properly valued based on the company’s actual business instead of on random 90-day unit sales numbers and other such bunkum.

8 Comments

  1. Apple down another 3% today. At the close of this week Apple will have dropped hard 11 of the last 12 weeks.

    Remember when Apple was worth 1 trillion dollars?

    Hold that memory tight. It’s not going to come back anytime soon.

  2. Manipulation based on anals. WS is full of crooked lame ass shiat puppeting brat.

    There will always be something with Apple. They break record sales every quarter but hey, lets shiat on!

    1. With the highest percentage of shares owned by non-institutional investors compared with the competition, volatility of AAPL is largely in the hands of individuals stockholders. Perhaps the average AAPL investor is more susceptible to influence than you believe.

  3. Bought 50 at 185 and another 50 at 160. Buy when everyone is scared but the story still is good. WS advisors kept telling me to sell but Apple has beat out their recommended portfolios. Suspect that Cramer and Buffet are holding or accumulating more also.

  4. Facts:

    Apple has underperformed the market by 7% in the last one month
    Apple has underperformed the market by 8% in the last 6 months
    Apple has underperformed the market by 7% in the last 12 months
    Apple has outperformed the market by 20% in the last 24 months
    Apple has outperformed the market by 50% in the last 60 months.

    Apple is up 30% in last 2 years
    Apple is up 100% in last 5 years
    Apple is at about the same level it was in April

    Its good to keep things in perspective rather than be a victim of lemming negative rhetoric and be a part of it.

    Always make your minds up on basis of factual information folks … not the other way around .

    Panic is a self fulfilling prophecy..
    and all this negative/ bashing talk , the fuel thats being added to the fire!….constantly.
    (Shorts and the competition are absolutely loving this)

    Go ahead and keep shooting yourselves in your own foot.

    Or keep a rational perspective.

    1. You spoke too soon.

      Since the November Apple slowdown, AAPL has shed its high flying prices and on the year is under the NASDAQ return, and both have a negative return on the year.

      Apple is dragging down the market. It was only a matter of time before software complacency, bad hardware design, and overpricing caught up with Apple. Good luck selling fashion Hermes watch bands to a nervous consumer whose savings are evaporating in the midst of an “easy to win” trade war.

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