Of Apple's $1.3 trillion valuation, says analyst Daniel Ives, Services represents $500 to $650 million.
From a note to clients that landed on my desktop Wednesday:
This morning Apple in a release highlighted its services strength on the flagship App Store with customers spending $1.42 billion during holiday season and thus grew an impressive 16% year over year.
Coupling this dynamic with AirPods which we now believe finished the year selling 67 million AirPods units (which was well above our original 56 million estimate) speaks to the underlying strength that Cupertino is having monetizing its golden jewel installed base of 925 million iPhones worldwide heading into FY20 and beyond.
We believe the services business and this linchpin annual revenue stream which is poised to hit $60 billion by FY21 is worth between $500 billion to $650 billion and is a core part of the re-rating that is happening on shares of Apple over the past year. We believe mid teen growth on the services business remains front and center as the core fuel in the engine for Apple as the company has the 1-2 punch of a 5G super cycle and a services business which is now starting to be properly valued by the Street in our opinion.
We continue to believe an upside on iPhone units, services, and AirPods will result in a strong December quarter for Cook & Co, on January 28th after the bell with clear momentum heading into a massive 5G super cycle with currently 350 million iPhone customers in the window of an upgrade opportunity.
Maintains Outperform rating and $350 price target with "bull case valuation scenario" at $400.
My take: Two price targets? Hmmm.
See also: Apple hones its Services messaging.