Needham: Apple’s Long-term Value is $180 per share

Apple Inc, apple stock, apple valuation, apple shares, apple financial position, technology company, iphone maker, iphone SE,

Apple Inc.’s stock has suffered enough for the past few months, especially due to the latest products that it launched along with the saturated smartphone market.

The clock is ticking for Apple Inc., as the smartphone market has started to saturate, as many skeptics suggest as well. However, it is looking for alternatives to tackle this problem; we know that other avenues that the tech giant is going towards include electric vehicles. An upward trend in the stock of the technology company is expected in the long-term as it aims to explore these potential opportunities.

In a note investors, a bullish stance have been given by one of the financial firms that covers the stock of Apple, Needham and Company. Laura Martin, an analyst at Needham and Company has stated in the investors note that given the iPhone maker’s dominance in the market, it is likely to take up the task of creating a novel digital network with the help of smartphones; she further stated that currently the tech company is in the best position to take up on this task.

As per the survey conducted by Ms. Martin, the findings suggest that the company’s annual churn rate is currently at 12% which means that there is presently less competition and hence more pricing power along with stream revenues. She has given a long term value of $180 per share to the technology organization which indicates a 62% increase from the current levels. She has based her valuation on the following points:

As per her findings, Apple is currently above both social media company leader Facebook Inc. and world class content leader, Disney. She stated that the profit margins of Apple are higher than that of both of these companies in the past five years. She believes that the iPhone maker should not be evaluated as only a hardware company. According to this methodology, she believes that Apple stock is likely to be traded at $200 per share.

Comparing the company with cable companies, the analysts stated that similar to how these cable companies have recurring subscription business models, Apple also has bundles in its hardware that include software, services, content (Siri). However, she analyzed that if we take the company is one of the cable organization; the stock should be valued at $180 per share.

The analysts surveyed over 300 iPhone users, and she found out that on average these users usually stay on apple’s ecosystem for at least eight years. Another thing she found out was that 1.3 IOS devices are used by these customers, which means that 1 billion active devices are being used by over 770 million customers in total, all across the world.

However, the financial services and research firm, Needham and Company has maintained a Strong Buy rating on the stock of the iPhone manufacturer along with a 12-month target price of $150. The stock already has been under a lot pressure after launching its ‘not so appealing’ products recently. In an attempt to attract customers again towards its products, the company launched iPhone SE priced at $399 in emerging markets such as China and India (mainly because it was a low-priced smartphone in comparison to how its products are usually priced).

Presently the stock of the tech giant is being traded in the market for a share price of $109.62.


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