Apple stock is a Must Buy, according to Goldman Sachs


Apple raked in the cash last quarter.
Apple's untapped financial frontier could be software.
Photo: Jim Merithew/Cult of Mac

I’ll never cease to be amazed by how Apple can announce record-beating quarters and introduce hit product after hit product, only for Wall Street to turn around and channel the old disapproving parental message of, “We’re not angry, just disappointed.”

Fortunately, Goldman Sachs has broken with tradition by issuing a note to clients with its strongest of recommendations that they buy AAPL stock — stamping it with a “conviction buy” rating, based on Apple’s potential for continued growth.

“With an estimated installed base of 500 million loyal iPhone users, we see a significant multi-year opportunity for Apple to increase monetization,” reads the note.

In particular, Goldman Sachs is enthused by the potential of “Apple-as-a-Service,” in which it uses its hardware penetration to sell additional subscription software like Apple Music and a possible future Apple TV bundle. Another source of revenue is Apple’s $32-per-month iPhone installment plan, which provides customers with the latest handset each year.

“In a recurring revenue framework, we have constructed an average revenue per user (ARPU) metric that captures the installment plan pricing of the iPhone ($32/month), assumed installment plans for the other hardware products, and services (e.g. Music at $10/mo, TV at $40/mo),” Goldman Sachs analysts write.

Should Apple take advantage of its possible revenue streams across even a small percentage of iPhone users, the financial firm suggests Cupertino could gain an added $7.6 billion in revenue each month.

Via: Business Insider