Apple (AAPL) shares jumped on Monday after receiving the second bullish report from a Wall Street brokerage firm in as many trading days.
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Goldman Sachs analyst Michael Ng started coverage of Apple stock with a buy rating. He also set a Street-high price target of 199.
On Friday, Morgan Stanley analyst Erik Woodring reiterated his overweight or buy rating on Apple, calling it a “top pick.” He also raised his price target from 175 to 180.
In the stock market, Apple shares rose 1.9% to 153.83 today.
Apple Services drive profit growth
In a note to customers, Ng said he sees Apple using its massive installed base of users to drive revenue growth and improved profitability.
“Apple’s success in world-class hardware design and resulting brand loyalty has led to a growing number of installed users providing insight into revenue growth by reducing customer churn, lowering acquisition costs for new products and services, and encouraging repeat business ng said. .
Most of Apple’s earnings growth over the next five years will be driven by services, Ng said. Services, with their higher profit margins, should support a premium multiple for Apple stock, he said.
“The sustainability of Apple’s installed base and the resulting visibility of revenue growth from connecting more services and products is the foundation of the recurring revenue — or Apple-as-a-Service — opportunity,” Ng said.
Apple Stock Approaches Buying Point
Apple stock has been consolidating for the past 61 weeks, since hitting an all-time high of 182.94 in January 2022.
More recently, Apple stock has formed a cup-and-handle base with a buy point of 157.48, based on IBD MarketSmith charts.
Apple has an IBD Composite Rating of 70 out of 99, according to IBD Stock Checkup. IBD’s Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths. The best growth stocks have a Composite Rating of 90 or higher.
Follow Patrick Seitz on Twitter @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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