Evercore: No love on the Street for Apple

Analyst Amit Daryanani did a lot of flying this week. He filed this from seat 27E in Economy Class:

ALL YOU NEED TO KNOW: We spent more time marketing this week, predominantly with Long Only investors. Discussions continue to revolve around… AAPL: If we got a $1 for everyone that is asking why the stock goes up despite soft iPhone data, I could have retired on a beach by now (Hint, perhaps something to do with $160B cash + maybe folks are getting behind the services narrative)…

No Love On the Street: The questions this week centered around China implications for AAPL (G20) coupled with the impact from Mr. Ive’s departure. We think the meeting could lead to less concern around China trade (some resolution or kicking the can down the road), which should be a positive for AAPL. We would note some of the smartphone data has been stable regarding AAPL share in China. While we understand investor questions around sustainability of the App Store driven by increased scrutiny of AAPL’s services and App Store model, we think Services is poised to accelerate near-term as we lap some of the China gaming issues last year (easy compares) when China essentially banned new game approvals; at the same time, new services like Arcade, media content, etc. could kick in.

Maintains Outperform rating and $215 price target. 

This was new to me: “Services is poised to accelerate near-term as we lap some of the China gaming issues last year (easy compares).”

3 Comments

  1. Gregg Thurman said:
    It’s only taken 3 to 4 years since TC first began touting Apple’s move from hardware centric to services centric growth, but here we are (better late than never) and WS is starting to take notice of the shift.

    The common investor doesn’t have the resources (available to WS) to define just how big one billion loyal Apple users can drive Apple Services. What the common investor does have is the vision to see the undefined potential of Services.

    We won’t see AAPL benefit from Apple’s shift to services until after the shift is well underway. Frankly, I see WS dragging its feet, with regard to AAPL, until such time as it has satisfied its appetite for AAPL ‘without driving the price up’ so fast as to cause WS to pay more than it wants to in the meantime.

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    June 30, 2019
  2. Aaron Belich said:
    AppleTV, and every other Apple device will have the hardcore console crowd’s favorite controllers available for use come fall in time for Arcades debut, plus the possibility of new AppleTV hardware. iOS and Nintendo already have the casual gamer and mobile crowds. What value did the console companies unlock with Playstation and Xbox? Apple is going to take a nice slice of revenue from both of them.

    0
    June 30, 2019

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