Morgan Stanley raises Apple price target to $177

Proprietary survey shows U.S. iPhone loyalty rate climbing from 86% to 92%, dwarfing competitors.

From a note to clients by Katy Huberty that landed in my inbox early Wednesday:

Retention Rate on the Rise as Supercycle Approaches. New AlphaWise survey points to a 92% US iPhone loyalty rate vs. 86% last year… It’s our belief that a maturing installed base that is accustomed to iOS and increased press around potential new technologies in the upcoming iPhone drove the strong Y/Y increase. Importantly, the rise in Apple’s loyalty rates comes after Samsung, Apple’s biggest competitor in the US (Exhibit 3), introduced the Galaxy S8, which was available for pre-order starting March 30th. Apple’s loyalty rate of 92% dwarfs that of all other vendors, with Samsung garnering a 77% retention rate, followed by LG (59%), Motorola (56%), and Nokia (42%).

Reiterate Overweight, raise price target to $177 from $161.

Below: Tracking iPhone retention rates.

Morgan Stanley tracks iPhone loyalty rate

Click to enlarge. Not seeing the bar chart? Try the website. 

3 Comments

  1. Fred Stein said:

    Astounding, 92% (errata, in sub heading should be 86% not 88%)
    The entire iOS ecosystem benefits, including suppliers, investors, App developers, and enterprise partners like IBM, Cisco, and SAP. The last category can invest in sales and support training to reap multi-year Enterprise revenue streams. WannaCry will help them sell more Apple products and embed more Apple products in their solutions.

    1
    May 17, 2017
  2. Robert Paul Leitao said:

    Not only are the retention rates high, Apple sells only high-end handsets in the only profitable segment of the smartphone market. Apple’s “economic moat” is widening as the combination of hardware, apps and services remains unparalleled, security is unrivaled and revenue per user continues to rise.

    In my view, the price target is well warranted heading into the biggest product update launch in the company’s storied history.

    0
    May 19, 2017

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