Evercore raises price target $5 to $130

Encouraged by a survey that found 70% of iPhone users subscribed to at least one streaming service and that 56% were interested in Apple One. 

From a note to clients by analyst Amit Daryanani that landed on my desktop Sunday:

All You Need to Know: We recently conducted a consumer survey to gauge interest levels across AAPL’s recent services bundle offering (Apple One). Key points from the survey:

    1. ~70% of iPhone users subscribe to streaming services (28% SPOT, 20% AAPL & 15% Prime).
    2. The 56% of current streaming subscribers (40% of aggregate iPhone users) interested in Apple One bundles was well above the 20% of iPhone users who subscribe to Apple Music, which should help Music become the dominant streaming platform on the iPhone.
    3. ~72% of Apple Music subscribers are interested in the bundle offerings, ~56% of SPOT users and ~47% of Prime Music users.
    4. iCloud has the strongest adoption with 50% of iPhone users already subscribing to this.
    5. In terms of interest in Apple Bundles – the interest was 31% to Apple One, 18% Apple One Family and 10% Apple Premium.

Net/net: We think Apple One bundle is a compelling value proposition and should bolster services acceleration by “few hundred basis points” as it uplifts ARPU. Furthermore, we think it will help enable Apple to win Music wars and draw incremental interest to offerings like Fitness+, Arcade & News.

Maintains outperform rating, raises target to $135 from $130.

My take: The minimum raise.

2 Comments

  1. Gregg Thurman said:
    This information supports Horace Dediu’s contention that the goal is to increase revenue per subscriber, even though the Bundles are heavily discounted. This is possible because of the extreme gross margins enjoyed by Apple’s wholly owned Services.

    I think the bundles will also wrest customers away from Spotify, Pandora and Cloud storage competitors.

    How many will subscribe to the $12.95 option, then add Apple Fitness ($19.90 total)?

    2
    September 20, 2020
  2. David Emery said:
    Updates like this are about clicks, not credible 52 week predictions.

    1
    September 20, 2020

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