Goldman Sachs on Wednesday noted that Apple’s stock would reach up to $163, telling investors that the iPhone Upgrade Program, Apple Music, and the streaming Apple TV device will change how the market views the company.
For analyst Simona Jankowski, a live TV streaming service would be a “key enabler” for the company, helping transition Apple’s business model into what she called “Apple-as-a-Service.” This news was detailed in a note to investors, which was summarized by Bloomberg.
In addition, Jankowski noted that…
“Theoretically, Apple could transition other products into installment plans as well, and charge customers a monthly bill that also includes its other services such as Apple TV and Music.”
Apple has even introduced a recurring revenue method for their best-selling and most profitable device, which comes in the form of the new iPhone Upgrade Program that launched in September. The service is an interest-free way for customers to pay for their new iPhone and AppleCare+ warrenty over a two-year time span. Users will also have the option to upgrade their iPhone to the latest version every 12 months.
With Wednesday’s upgrade, Goldman Sachs added Apple to their “Conviction Buy” list. The firm also set a 12-month price target of $163 for shares of AALP (Apple).
According to Jankowski, the key factor for continued growth in stock is for investors to stop viewing and trading Apple as if they were a hardware company. Instead, she notes that if traders were to view Apple as a service company along the lines of Facebook or Google, its stock would trade at a much higher price-to-earning ratio.
As of this writing, shares of AAPL stand at $116.95. The company has a price-to-earning ratio of just 12.33 trailing 12 months.
Source info: Bloomberg