Goldman Sachs Analyst Simona Jankowski Assumes Coverage on Apple (AAPL)

(Updated - September 22, 2015 9:09 AM EDT)

Goldman Sachs assumed coverage of Apple (NASDAQ: AAPL) from Bill Shope to Simona Jankowski with a Buy rating and a price target of $163. Jankowski thinks there are three reasons to own Apple -- the iPhone, the iPad, and Internet of Things.

"We see meaningful upside to consensus estimates in FY16 (Sep) on higher units and ASPs for both the iPhone and iPad product cycles, with our FY16 revenue/EPS estimates 5%/6% ahead of the Street. Given low market expectations, we think an upward estimate revision cycle will likely propel the stock higher. Longer term, we see the move to the Internet of Things (IoT) as adding significant value to Apple’s platform and ecosystem, given the premium it places on privacy and security," said Jankowski.

Consensus expectations for the iPhone 6s product cycle are low, with the Street modeling flat iPhone revenues after a surge in the iPhone 6 cycle last year, said the analyst. "By comparison, we model 6% iPhone revenue growth (+7% units and -1% ASPs) in FY16, as our replacement cycle model shows that units can grow just on the strength of upgrades in the installed base, even with declining gross adds."

"We model the current iPhone installed base at 457mn, up 32% yoy, and we find a 90%+ correlation between growth in the installed base and growth in upgrades. We also see flattish ASPs, as the mix shift to higher-capacity SKUs (to hold live photos) and higher-priced older models offsets moderating FX headwinds," Jankowski added. "For the iPad, we are 14% above consensus FY16 revenues, as we expect the iPad Pro to drive a consumer refresh, expansion into enterprise, and higher ASPs. Our US consumer survey showed the iPad as the top consumer electronics item for the holidays, with a very strong showing for the iPhone as well."

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $115.21 yesterday.

You May Also Be Interested In

• Goldman Sachs Upgrades The TJX Companies (TJX) to Buy, 'best-in-class operator'
• Sherwin-Williams (SHW) PT Lowered to $370 at RBC Capital
• CME Group (CME) PT Raised to $187 at Rosenblatt