Analyst Steven Milunovich of UBS attempted to describe the transformation of tech giant Apple Inc. (NASDAQ:AAPL) after an earnings report that saw profits decline once again. Even though it beat expectations iPhone revenue, the largest part of Apple’s business, declined 23% YoY.

Apple has been experiencing some difficulties lately, which has forced management to have to pitch its value to investors. The last few quarters’ management has focused on the rising strength of Apple’s services like the App Store, Apple Music and Apple Pay. This shift from hardware to software has not been so well received as it gives off the impression that Apple is losing confidence in its product.

Milunovich’s issue with Apple management’s strategy is that “services is tied to and strategically subservient to hardware in that the primary platform is iOS.” Despite this, the analyst feels that Apple just wants to bring notice to how well its services is performing, which is currently 15% of the company’s profit.

With Apple’s struggles continuing the analyst wanted to get to the core to the question “what is Apple?” First and foremost, the company deals with personal technology, targeting both businesses and consumers. CEO Tim Cook always states that Apple is trying to make the best products to make people’s lives better with a focus on user experience. His ultimate goal is to have “iOS everywhere” by bringing it where people go and where they work.

Milunovich acknowledges that Cook’s vision is a bold one that “implies a broader product line and requires the help of third-parties.” He also argues that Apple has to be considered “less fragile” and not as iPhone reliant. He thinks that as Apple increases its amount of products and services, it can “offer a discounted subscription to multiple offerings, creating a true annuity stream.”

The analyst maintained his Buy rating with a price target of $115, marking a 10% increase from current levels.

According to TipRanks, the analyst has a yearly average return of 2.2% and a 49% success rate. The analyst has a 1.5% average return when recommending Apple, and is ranked #1,121 out of 4,083 analysts.

TipRanks shows that out of the 40 analysts who rated Apple in the last 3 months, 85% gave a Buy rating, 10% gave a Hold rating and 5% gave a Sell rating. The average 12-month price target for the stock is $124.29, marking a 19.27% upside from current levels.


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