Apple got a rating of ‘buy’ from Jefferies' analysts who initiated coverage of the stock. Analyst Kyle McNealy noted that according to Jefferies model, market share by price level shows that Apple's share increases as prices go higher. The analyst also emphasized on the iPhone maker’s potential in services and 5G.
Apple generates services revenue from every active device of $38 in fiscal 2020, compared $25 in 2017, according to the analyst.
McNealy mentioned that their iPhone units outlook is ahead of the Street by 9 million for fiscal 2020 with most of these coming from the midrange. Assuming these are mostly new iPhone users, Apple would make $342 million in annual services revenue off of these customers -- or almost a point of services growth, according to McNealy.
At Jefferies’ current 13.4x multiple on calendar 2020 base business EPS estimate, they think that Apple shares are “ too cheap” for a business that they expect would drive over +8% top-line growth and +12%-plus earnings per share power sustainable over time.