(Benzinga) -
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Morgan Stanley analyst Erik Woodring saw Apple Inc's (NASDAQ: AAPL) pivot to a subscription-like model, making way for a market cap of over $3 trillion.
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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.
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"The Apple business model migrated from one that maximizes hardware shipment growth to one that maximizes installed base monetization, Woodring noted.
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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.
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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.
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The current stock price implies a material valuation discount to other tech platforms and software-as-a-service businesses, Woodring said.
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Woodring slashed Apple's price target from $185 to $180.
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Price Action: AAPL shares traded higher by 0.30% at $153.60 in the premarket on the last check Thursday.
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Photo by howard-bouchevereau via Unsplash
Latest Ratings for AAPL
|
Date |
Firm |
Action |
From |
To |
|---|---|---|---|---|
|
Mar 2022 |
Barclays |
Maintains |
Equal-Weight |
|
|
Feb 2022 |
Tigress Financial |
Maintains |
Strong Buy |
|
|
Jan 2022 |
Credit Suisse |
Maintains |
Neutral |
View More Analyst Ratings for AAPL
By Anusuya Lahiri
