UBS equity research circulated a note to clients May 10 after the bank spoke to two Apple experts, Horace Dediu and Neil Cybart, to get an outside opinion from two technology wizards on where Apple stock will go from here.
“Mr. Dediu underscored Apple’s emphasis on product and customer satisfaction above all else, resulting in a brand that supports premium pricing,” the note said.
“Both indicated that the recent narrative shift from a hits-driven business to services and more annuity-like consistency has been positive,” the note added. “Mr. Cybart argued that now is the time for Apple to milk the iPhone.”
Both Dediu and Cybart expect the iPhone 8 to be a success, not necessarily as a result of any new revolutionary upgrades, but rather from the high level of pent-up demand for a new phone.
Dediu said, “every Apple product (outside services) is about $1/day—if the OLED phone is priced at $1,000, the upgrade cycle will be about three years.”
Cybart thinks that Apple has a tremendous opportunity in wearable technology and wireless headphones as competition fades.
UBS has a “Buy” rating and $165 price target on Apple stock, implying 7.7% of upside.
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