Apple (AAPL): 5 Things to Like About Apple's Developer Conference - Needham & Company

Needham & Company analyst, Laura Martin, wants to push back against the notion that Apple (NASDAQ: AAPL) must introduce awe-inspiring hardware in order to drive upside to valuations. Here are 5 things to like about WWDC so far:

Economic Upside. AAPL is integrating its 4 operating platforms (MacOS, iPhone, tvOS and WatchOS) more closely. Bundling devices results in more stickiness (i.e., lowers churn) and sells more devices. In other businesses, bundling often adds 20-50% to economics.

Device Integration. AutoUnlock allows consumers wearing an AAPL watch when they open their MAC not to login because the watch logged in for them already. Or ordering a sofa on your iPad while putting your fingerprint on your iPhone to prove it's you paying for it. AAPL’s Universal Clipboard allows customers to copy anything from their MAC and paste to their phone in 1 motion, because all iOS platforms interconnect.

Software upgrades can be as valuable as hardware upgrades, in our view. We expect AAPL’s content upgrades to deepen folks’ relationship with their iOS devices and to elongate consumers' daily usage time. Automatic integration of your photos to music, and automatic playlists in Music, and News is now more personally targeted, and maps have more interactivity and speed, and safari now has 2 websites viewed simultaneously, and picture in picture for video, and HomeKit settings from anywhere via the cloud. All these content upgrades are designed to increase average usage per day, thereby increasing consumers' value attributable to the iOS ecosystem, and pricing power.

Messaging. We were especially impressed with what AAPL did with its messaging app. Adding many creative choices to how owners can express themselves should increase chats and elongate engagement time on the iPhone.

They believe that as larger monetary transactions are completed via smartphones, AAPL’s end-to-end encryption will become more highly valued by consumers. All analysis of data is done on the device and AAPL does not keep a user profile, and since AAPL doesn’t sell ads, they don't use targeting data.

No change to Strong buy and $150 PT.

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 $97.34 yesterday.

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