Apple (AAPL) Needs Successful New Services To See EPS Growth - Macquarie
Macquarie analyst, Benjamin Schachter, reiterated his Neutral rating on shares of Apple (NASDAQ: AAPL) after the company reported earnings and offered guidance that was better than feared but slowing growth in high margin businesses makes the company dependent on new announcements to justify a rally in share price.
The analyst expects a video subscription to come to market this year and stated "We remain focused on Services and that did (and we expect will continue to) slow. We still like the Services business, but expect it will slow and lower-margin businesses (Music, iCloud, video?) will drive more top-line growth, while higher-margin businesses such as App Store and Licensing will slow (as well as Apple Care)". He went on to discuss what needs to happen to justify an upgrade stating "we want to see AAPL execute with new Services businesses (video and also more health care over the LT). Overall, we expect ’19 EBIT to decline 9% this year and earnings to be flat." No change to the price target of $149.
Shares of Apple closed at $163.28 yesterday.