Analysts Say Apple's Future Is In Transportation, Not Just A Car But An 'Experience'

UBS's Steven Milunovich consulted with two notable Apple Inc. AAPL experts to gain further perspective on the company's outlook. The analyst met with Asymco's Horace Dediu and Above Avalon's Neil Cybart, both of whom are positive on Apple's business.

Dediu explained to the analyst that Apple's top two priorities are product and customer satisfaction, and this results in the company's brand commanding a premium pricing. Cybart's main takeaway is that at its core, Apple is a design company that focuses on user experiences.

Both experts agree there has been a recent shift in Apple's narrative from a "hits-driven business to services and more annuity-like consistency" — and this is a positive move. Both did, however, dismiss most M&A speculation of a mega-acquisition since Apple has a reputation of acquiring resources, not products in new areas.

IPhone Expectations

Dediu and Cybart are both expecting the iPhone 8 cycle to show strong upgrade metrics from consumers, not necessarily from new features but from pent-up demand. However, China is less certain, as consumers in the country "appear sensitive to format changes." China's WeChat might be "more important than iOS."

The Big Opportunity

Some Apple investors are eager for the company to communicate its long-term vision and what market it will enter besides electronics.

Dediu highlighted the fact that the automotive market is valued at anywhere from $5 trillion to $15 trillion, which makes it larger than the IT or healthcare markets. Cybart even said, "Transportation is Apple's future" and Apple's secretive "Project Titan" could be a transportation platform — not a car but the "entire experience."

"The experts think that car ownership will plummet with autonomous driving (which could take some time to arrive)," Milunovich wrote. "Then who is going to own all these cars? It might be Apple, one plausible reason to keep a large cash balance."

The analyst maintains a Buy rating on Apple's stock with an unchanged $165 price target.

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