Wells Fargo Likes the Idea of Apple (AAPL) Buying McLaren

September 21, 2016 2:20 PM EDT
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Wells Fargo analyst Manard Um weighed in on Apple (NASDAQ: AAPL) amid refuted reports that it is in talks to acquire or make a strategic investment in luxury automaker McLaren.

Um said while McLaren may be best known for its luxury cars, its McLaren Applied Technologies (MAT) division should be more interesting to Apple (and others).

"McLaren uses sensors in its race cars to collect data on tire pressure, brake temperature, the impact of force, etc and uses the data to improve car maintenance and performance through its predictive analytics engine," he commented. "The predictive analytics engine it uses is also being leveraged across other industries (oil & gas, healthcare, et al.) and appears to be ramping as its own business. MAT is also developing wearable technology to collect personal data but use its predictive analytics to improve lifestyles and predict how the body will react in the future to familiar situations."

McLaren would also bring design elements, engineering, and electronic control systems to the table would be a bonus.

McLaren's website indicates it "enjoys an equity value in excess of £1.2 billion" (as of Feb 16, 2016) and had pre-tax profit of £6m for 2015 (versus a £22m loss in 2014). Um would think valuations could be materially higher though, if a deal were to materialize, but unsure how Apple would manage selling analytics to external customers, where it has limited expertise.

Um notes the the timing of an Apple Car seems more uncertain now with reports of a change in management. He said while an Apple Car is important to the future of Apple they do not think it has bearing on the near- or medium-term direction of the company.

The firm maintained a Market Perform rating on AAPL.

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