UBS Maintains a 'Buy' on Apple (AAPL); Quantifying iCloud & the Halo Effect

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UBS maintains a 'Buy' on Apple (NASDAQ: AAPL), PT increased from $495 to $510.

UBS analyst says, "While we expect modest accretion, we believe the greater impact will be on further pull along sales of its hardware portfolio. To quantify the halo effect, we analyzed Mac share growth following iPod/iPhone launches &, after a deep dive, estimated pot’l Mac upside from our prior ests of $0.39 in 2011 & $0.71 in 2012, all else equal. We raise our FY11 EPS to $25.11 from $24.81 & FY12 to $28.91 from $25.82 on higher Mac, iPhone, iPad ests (w/ further upside)."

"We examine streaming business models from Lala, Microsoft (Nasdaq: MSFT), Netflix (Nasdaq: NFLX), Amazon (Nasdaq: AMZN), etal and conclude Apple’s service is likely to be more seamless relative to competitors and, at $15/month fee (presuming eventually it will be for all content and not just music), note that assuming 10% of its 200mn iTunes customers convert and 10% op mgn equates to ~$0.10/qtr in EPS. More importantly, we believe the service would make Apple’s ecosystem stickier."

For more ratings news on Apple click here and for the rating history of Apple click here.

Shares of Apple closed at $347.83 yesterday, with a 52 week range of $235.56-$364.90.

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