At the UBS tech conference, a panel of industry researchers and journalists gathered to discuss Apple (AAPL) and what is in the company’s cards. Some topics discussed: lack of unit disclosure, video content, privacy, car ambitions, its position in China, its position as a luxury brand. Health services and wearables were said to be the tech giant’s biggest opportunity ahead while the biggest risks were considered to be product innovation. Another discussion was whether Apple “has it in them” so to speak, to be a successful services company barring mergers and acquisitions. UBS top analyst Timothy Arcuri joined the session and reported back.
“Everyone generally agreed that lack of unit disclosures makes it difficult to follow Apple but the consensus seemed the concerns would quickly subside as long as iPhone rev continues to grow,” Arcuri said. “Relative to the iPhone/services, the panel felt some concern that lower price points will have to drive services growth and these users are not typically heavy engagers w/ the paid ecosystem.”
As far as Apple being a luxury brand, the company says it doesn’t want to go too far downmarket with iPhone ASP. The tech giant recognizes it is a unique luxury brand, as its reach is broader and cuts across more ages than a typical luxury brand.
When it comes to services, the panel agreed there has been relatively little new content initiatives since Apple Music. Video was discussed as an opportunity, but the costs to prepare content is high and the video doesn’t seem to reach as broad of an audience the way music does. It was also decided that keeping Apple’s “family friendly” values is more difficult to uphold when producing video than music.
“Experts agree consumers in China are unlikely to create a major backlash as Apple is a major Chinese employer and any restrictions or tariffs would likely hurt the overall economy. Lastly, its privacy position was not seen as much of a competitive advantage per se as this is not high on consumer selection criteria for Apple products,” Arcuri said.
Bottom line: The analyst maintains a Buy rating on AAPL stock, with a $225 price target, which implies a 27% upside from current levels.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Tim Arcuri has a yearly average return of 24.7% and a 67% success rate. Arcuri has a 27.5% average return when recommending AAPL, and is ranked #33 out of 4,887 analysts.
Out of 35 analysts reviewed by TipRanks, 21 consider AAPL a Buy, while 13 are sidelined and 1 is bearish. The consensus rating is Moderate Buy and the price target shows a 33.50% upside at $236.27. (See AAPL’s price targets and analyst ratings on TipRanks)