Analysts are weighing in on the consumer electronics giant Apple Inc. (NASDAQ:AAPL) and online payment giant Paypal Holdings Inc (NASDAQ:PYPL), as U.S. stocks edged higher in early trading on Tuesday.
At the Wall Street Journal’s WSJDLive conference on Monday night, Apple CEO Tim Cook said AAPL now has 6.5 million paying customers for Apple Music and 8.5 million customers on three-month trial subscriptions, with 15 million in total.
According to FBR Capital analyst Daniel Ives, this is the first time that Apple has given numbers around this key streaming initiative (launched at the end of June), as the Street is focused on success out of the gates on the streaming music front.
Ives noted, “We believe this is just the first step before Cook & Co. unveil a streaming TV service in 2016. As we were estimating 5M paid Apple Music subscribers by the end of October, we would characterize this initial stage of the launch as a “triple” in the streaming ballgame. Now the goal is for Apple to further spread the gospel to/convert more trial customers over the next three to six months while adding unique content and services. For comparison: The leader in streaming music, Spotify, has 20M paid customers and 55M free customers; but, importantly, we note that the company has been doing this since 2008. We now believe that Apple is laser-focused on gaining significant market share on this front over the coming year.”
Ives reiterated an Outperform rating on Apple shares, with a price target of $175, which represents a potential upside of 58% from where the stock is currently trading.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Daniel Ives has a total average return of 3.9% and a 51% success rate. Ives has a -6.1% average return when recommending AAPL, and is ranked #867 out of 3793 analysts.
Out of the 50 analysts polled by TipRanks, 34 rate Apple stock a Buy, 14 rate the stock a Hold and 2 recommend Sell. With a return potential of 33%, the stock’s consensus target price stands at $147.69.
Paypal Holdings Inc
In a research report released yesterday, Deutsche Bank analyst Bryan Keane reiterated a Buy rating on shares of Paypal, and raised the price target to $44 (from $42), as the company is scheduled to report its third-quarter earnings after the bell on Wednesday, October 28th.
Keane wrote, “On October 28th we see PYPL reporting revenues of $2.25bn (+14.2% y/y, +18.4%cc) and EPS of $0.29. PYPL will report its first earnings as an independent company and we believe a solid 3Q print could help get investors comfortable with the model. The ramp of One Touch rollout, monetization of Venmo, large merchant win (omni-channel win with Macy’s) and expansion into payment processing for online gaming bode well. Despite take rate moderation from mix shift, we expect the operating margins to expand due to operating leverage. Trading at 11x CY17 EV/EBITDA, a discount to merchant acquirers despite significantly higher growth rates and unique digital payment asset, we continue to like the risk/reward.”
According to TipRanks.com, analyst Bryan Keane has a total average return of 14.8% and a 79.2% success rate. Keane has a 0.7% average return when recommending PYPL, and is ranked #143 out of 3788 analysts.
Out of the 32 analysts polled by TipRanks, 21 rate Paypal Holdings Inc stock a Buy, 8 rate the stock a Hold and 3 recommend Sell. With a return potential of 19.2%, the stock’s consensus target price stands at $41.51.