- 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
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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