Wall Street Analyst Shares Two Cents on Apple (AAPL) Following Deal with the Queen of Media
So maybe she won’t be the US’ next president, but we’re about to be hearing a whole lot more from the queen of media Oprah Winfrey as she has just signed a multi-year deal with Apple (NASDAQ:AAPL) to create original programming.
GBH Insights analyst Daniel Ives believes this is just the “tip of the spear” for Apple launching an aggressive video content strategy over the next 12 to 18 months.
Ives wrote, “We believe the company [Apple] will now be stepping up its game and resources behind acquiring original content heading into 2019 and potentially launching its own streaming service by late 2019 after years of debating this decision. With the company spending less than $1 billion on its content strategy today, we estimate Apple could ramp up its spending to between $3 billion and possibly up to $4 billion in 2019, which is still well below that of Amazon and Netflix in this streaming content arms race.”
Furthermore, “We believe inking an A+ Hollywood name/talent like Oprah speaks to the type of content and resources Apple is willing to spend as it significantly ramps its streaming ambitions. This is an aggressive move that speaks to Apple and Cook’s serious focus on adding content to its distribution over the coming 12 to 18 months. Oprah and other major deals on the horizon are the first step in this Trojan horse content strategy set to be unveiled over the coming year as this latest deal is a “shot across the bow” from Apple and shows its content strategy is about to accelerate into another gear with other streaming competitors now keeping one eye open on Cupertino’s plans moving forward.”
Net net, Ives maintains a Highly Attractive rating on AAPL stock, with a $200 price target, which implies a 6% upside from current levels. (To watch Ives’ track record, click here)
Ultimately, Wall Street is just not sure yet about this tech giant, but the optimists still win out in the bigger picture. TipRanks indicates a cautious analyst consensus circling Apple shares. Out of 28 analysts polled in the last 3 months, 15 rate a Buy on AAPL, while 13 issue a Hold. The 12-month average price target stands at $196.75, marking a slight upside potential of nearly 4% from current levels.