Apple (AAPL) PT Raised to $140 at BMO Capital
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BMO Capital analyst Tim Long reiterated an Outperform rating and raised his price target on Apple (NASDAQ: AAPL) to $140.00 (from $116.00) following the iPhone 7/7+ and Watch Series 2 launch and after digging into services.
On the iPhone launch, Long commented, "commentary from the U.S. operators has been encouraging, particularly T-Mobile and Sprint. We believe customer reception to the device itself has been strong, but the U.S. operators have been promoting the device more aggressively than we expected. The U.S. carriers are basically offering a new phone by allowing for a trade in of an iPhone 6 or later for $650 in credits, well more than those phones are worth today. Operators in Canada, Europe, and Asia are taking a traditional approach. We expect unit upside in September and December to be driven by the U.S. carriers."
They also believe the Watch Series 2 will perform well over the next several quarters, with the addition of GPS, a brighter screen, faster processor, and better waterproofing. They are still modeling less than a 10% attach rate, which they think will prove conservative over time.
After another solid quarter, they believe the total iPhone installed base is now over 650 million, including used devices. They expect Apple to continue to gain subscriber share, and now model 12% CAGR installed base growth through 2019.
Long also think the service revenue stream is becoming more predictable, particularly for the App Store, iCloud, and Music. Their model shows the Service revenue line growing by 10% CAGR through 2019.
Shares of Apple closed at $115.57 yesterday.
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