Morgan Stanley Reasons Why It Sees Apple Reaching $3T Valuation

Morgan Stanley analyst Erik Woodring saw Apple Inc's AAPL pivot to a subscription-like model, making way for a market cap of over $3 trillion.
While the market still tends to value the iPhone maker as a hardware company, shifting to a "lifetime value" based approach factoring in recurring revenues from services suggested a long-term upside to over $200 per share or more than $3 trillion in market value.
"The Apple business model migrated from one that maximizes hardware shipment growth to one that maximizes installed base monetization, Woodring noted.
He added that Apple's disclosures on services revenue, the installed user base, and its move away from reporting iPhone units, were evidence of the shift.
Woodring, who rated Apple Overweight, said that his lifetime value model assumes that Apple users will spend $2 per day on Apple products or services, a figure already achieved by US iPhone owners.
The current stock price implies a material valuation discount to other tech platforms and software-as-a-service businesses, Woodring said.
Woodring slashed Apple's price target from $185 to $180.
Price Action: AAPL shares traded higher by 0.30% at $153.60 in the premarket on the last check Thursday.
Photo by howard-bouchevereau via Unsplash

Overview Rating:

Good

100

0100

Analyst Calendar