Apple (AAPL): Pokemon Go and Samsung Drove Upside - Needham
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Needham & Company analyst, Laura Martin, reiterated her Strong Buy rating on shares of Apple (NASDAQ: AAPL) revenue of $46.85B was down 9% y/y but up 2% vs estimates. EPS of $1.67 was down 15% y/y but up 3% vs estimates. iPhone revenue rose $4.1B to $28.2B driven in part by Samsung’s Galaxy Note 7 imploding in September.
The analyst stated "Forbes valued the Samsung brand at $83B before the Note 7 debacle and we estimate $10-$20B of brand value transfers to AAPL during the next adoption cycle owing to Samsung’s poor handling of the replacement, recall and ultimate discontinuation of the Note 7."
Services revenue was a bright spot, up 24% y/y to $6.3B in FY4Q16. Of the $350mm extra services revenue q/q, channel checks indicate that Pokemon Go represented much of the growth. Software-based revenue growth underscores AAPL’s platform value, and raises reported margins, lowers earnings volatility, and lowers risk compared to a hardware-only business model.
No change to the price target of $150.
Shares of Apple closed at $118.25 yesterday.
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