Goldman’s Apple analyst, on the other hand, thinks Apple is headed for $140 a share.
From Jim Cramer’s Mad Money show Thursday:
According to Dan Schulman, the CEO of PayPal,… payments represent a $100 trillion global addressable market opportunity.
Apple just got in the race with no financial risk. That’s all borne by Goldman. As for Goldman, they’re not cannibalizing anything because they don’t really have another card.
Apple sells at less than 15 times next year’s earnings. Goldman sells at just 7 times earnings next year’s earnings. How embarrassing!
I think they’re both undervalued here, in part because the financial analysts who follow Goldman and the tech analysts who follow Apple simply don’t understand these news stories.
Cue the video:
My take: Speaking of analysts who follow Goldman and Apple, Goldman’s Apple analyst, Rod Hall, looked at Apple’s Services offerings, including Apple Card, and stuck to his Neutral rating and $140 price target, the lowest of the 30 Apple analysts whose targets I track.
From Hall’s March 25 note to clients:
Apple Card interesting but small earnings impact for Apple. Apple announced a new credit card (“Apple Card”) which offers 3%/2%/1% cash back on purchases made directly-with-Apple/with-Apple-Pay/other-purchases. Even though Apple Pay is becoming more available we would still expect a large percentage of transactions to be done at the 1% return level (using the physical card) so we would expect the typical consumer to perceive the cash return rate to be OK but not great (vs. 1.5% on all transactions available on some competitor cards). Assuming a 35bp/dollar spent take rate (inline with a 20bps-50bps range based on industry checks), $1,000/user/month spend (roughly inline with Amex cards) and 21m users (~10% of iPhone installed base in the US), we estimate Apple Card could generate $882m in revenue and $0.12 in EPS (we show sensitivities in Exhibit 1 below). This would equate to just under a 1% uplift to CY20 FactSet consensus EPS.