Wednesday Morning’s Market Insights: Apple Inc. (AAPL), Seadrill Ltd (SDRL), Qorvo Inc (QRVO)


Apple Inc. (NASDAQ:AAPL) shares rose 2.83% this morning after Goldman Sachs analyst Simona Jankowski added Apple to her “conviction buy” list with a price target of $163. She states, “We expect that over the next year, the focus will shift from unit growth (which is slowing given a maturing smartphone market) to installed base monetization and recurring revenues (“Apple-as-a-Service”). Apple’s model has already tilted that way with its new iPhone 6s installment plans, and we see the upcoming TV service as a powerful next step.” The analyst states that Apple has a loyal customer base, with 90% being repeat customers, who are more likely to purchase Apple TV. With a transition by millennials into more wireless devices, these customers are more likely to purchase TV bundles. She continues, “Theoretically, Apple could transition other products to installment plans as well, and charge customers a monthly bill that also includes its other services such as Apple TV and Music. We think a potential live TV service from Apple would be a key enabler of this transition to an ‘Apple-as-a-Service’ business model.” The analyst believes this transition can increase the company’s average revenue per user from $42 to $153, although this is more of a long-term outlook.

According to TipRanks’ statistics, out of the 38 analysts who have rated AAPL in the last 3 months, 29 gave a Buy rating while 9 remain on the sidelines. The average 12-month price target for the stock is $148.85, marking a 31% upside from where shares last closed.AAPL Consensus

Click here to see analyst Simona Jankowski’s past ratings and performance history

Seadrill Ltd (NYSE:SDRL) surged almost 5% today after data released yesterday by the American Petroleum Institute indicated that U.S. oil inventories decreased by 482,000 barrels. As a result, Brent crude oil rose 65 cents to $44.22 per barrel and US crude oil increased to $41.13 a barrel.  Investors await a confirmation of the announcement by U.S. Department of Energy later today. Dominick Chirichella of New York’s Energy Management Institute stated, “With all of the fundamental signs still pointing to lower prices, the downtrend (is) still the dominant trend in the oil complex.” The Organization of Petroleum Exporting Countries (OPEC) did not produce a consensus when they met this past Tuesday, which analysts believe “doesn’t bode well for the possibility of production cuts ahead of their Dec.4 meeting.” OPEC’s average oil price is currently $38.29 a barrel, the lowest in almost 6 years. Michael Poulsen, oil risk manager Global Risk Management, a Copenhagen-based firm, believes that even though oil prices are low, it is not likely production will decrease given that Indonesia recently rejoined the organization. Iran will also likely increase production in 2016.

According to TipRanks’ statistics, out of the 3 analysts who have rated SDRL in the last 3 months, 2 gave a Sell rating while 1 remains on the sidelines. The average 12-month price target for the stock is $9.00, marking a 50% upside from where shares last closed.SDRL Consensus

Qorvo Inc (NASDAQ:QRVO) shares were up 2.61% in early trading after positive sentiments following the semiconductor company’s analyst day. Since the company merged from RMFD and TriQuint, the company focused more on high growth opportunities by restricting its IDP product portfolio. Management believes this restructuring will increase IDP 2-3 times more quickly than its historical MSD growth rate. Analyst Quinn Bolton from Needham and Company states, “Qorvo held an upbeat Analyst Day that saw the company not only highlight growth drivers for its Mobile Products (MP) and Infrastructure and Defense Products (IDP) businesses but also raise its LT operating model to reflect merger synergies and increased scale. MP targets faster than market growth driven by its strong position in premium filters and switches, share gains at Samsung and MediaTek, entry into the receive diversity segment and growth in WiFi. Qorvo has repositioned its IDP business around higher growth opportunities in defense, optical, cable, IoT and wireless infrastructure markets. While the possibility of lower iPhone shipments Y/Y remains a near-term overhang, we come away from Analyst Day incrementally more positive on the LT revenue growth and margin expansion opportunity for QRVO. Reiterate Buy and $64 PT.”

According to TipRanks’ statistics, out of the 8 analysts who have rated QRVO in the last 3 months, 5 gave a Buy rating while 3 remain on the sidelines. The average 12-month price target for the stock is $68, marking a 24% upside from where shares last closed.QRVO Consensus

Click here to see analyst Quinn Bolton’s past ratings and performance history