Apple shares surged Monday after analysts at KeyBanc Capital Markets initiated coverage on the stock with a bullish outlook, citing growth in the tech giant’s services segment. Analyst Brandon Nispel rated the stock “Overweight” with a $191 price target.
The target presents an 18% increase from Apple’s (ticker: AAPL ) $161.84 closing price on Friday. The stock was up 3.2% to $166.97 on Monday.
“While AAPL is expensive by historical valuations, we find AAPL attractive relative to other mega-caps,” Nispel wrote on Monday…
The analyst forecasts Apple to have 1.09 billion active iPhones and 1.8 billion active installed devices by the end of the first quarter of the 2022 fiscal year. This presents a 7% and 8% year-over-year increase, respectively.
“This shows a healthy growing user base where Apple iPhone market share is low relative to key geographies outside the United States,” Nispel wrote. “As the installed base grows, a larger base can support more sales on lower upgrade rates.”
As hardware adoption grows, so does Apple’s services business. The segment, which includes services such as Apple TV+, Music, News+, AppleCare, Advertising, and Cloud, has grown 27% in the 2021 fiscal year. Over time, it could become a key profitability driver, growing to more than $100 billion by 2024, Nispel said.
MacDailyNews Take: As we wrote when Apple closed at $109.22 on September 21, 2020:
Apple will come out of the post-COVID-19 recession in a very strong position. AAPL is significantly undervalued and should therefore be considered as available at a deep discount price today.
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Let’s go, Brandon!