- Wall Street analysts weighed in on the special event that Apple held on Monday, where the company unveiled new offerings.
- While many analysts kept their ratings unchanged – at least one firm bumped up its price target for Apple shares.
- Goldman Sachs analysts said the event was “materially different than we had expected,” and expected investors’ focus to return to Apple’s slowing iPhone business.
- Watch Apple trade in real-time.
So say Wall Street analysts who walked away from the big event pleased with the release of Apple’s new, long-rumoured television streaming and news services, but searching for greater pricing detail.
Apple unveiled Apple News Plus, its premium news service; Apple Arcade, its gaming subscription service; Apple TV Plus, its streaming service; and a physical credit card called Apple Card.
And while pricing for Apple News+ was set at $US9.99 per month, precise release date information and pricing for the other services were not given.
Clarity on such plans is crucial for determining Apple’s success in these areas as the tech giant makes its foray into the highly competitive streaming arena.
“Apple’s Services reveal was materially different than we had anticipated,” Goldman Sachs analysts led by Rod Hall wrote to clients on Monday. “The Apple TV+ service which we expected to be available now was only previewed for Fall availability with no pricing information.”
Additionally, Apple offered no services bundle to compel users to sign up now, Hall and his team noted – though the company said such a deal could still come later this year. The firm also said investors’ focus would now return to Apple’s slowing iPhone sales with the event in the rearview mirror.
Other analysts expressed dismay over the fresh streaming gaming and television offerings arriving later this year rather than an immediate launch.
“Given some of these Services are not available until the fall, it is surprising that Apple chose to schedule this event in March,” analysts at Bank of America Merrill Lynch told clients on Tuesday.
Still, analysts largely maintained their optimistic views of the company, with at least one firm, UBS, upping its price target.
As of Tuesday, Wall Street was evenly split between analysts who recommend holding the stock and those who suggested buying it.
Here’s a snapshot of what analysts told their clients following Apple’s big event:
Jefferies: ‘Building a Netflix Competitor Won’t Come Cheap’
Price Target: $US160
“Heading into this event it was unclear exactly what Apple would announce and it is now clear it intends to build a true Netflix competitor, and they don’t come cheap,” analysts led by Timothy O’Shea wrote on Monday.
They added: “We see limited pricing power given the small content library at launch, and if Apple is playing the long game here it could pressure financials for years.”
JP Morgan: ‘Services Event Offers More Breadth and Less Depth; Positive on Card and Gaming, Less So on Video and News+’
Price Target: $US228
“Apple’s event yesterday focused on launch of services and offered more breadth than investors expected, but at the same time it failed to offer the same depth that investors would have liked to see to position each category for success,” analysts led by Samik Chatterjee wrote on Tuesday.
The team added that particularly with expectations running high into the event, the revelation that Apple TV+ would be a “pure aggregator” likely left investors disappointed.
Goldman Sachs: ‘TV service later than expected with no pricing and no bundle for now. Credit card incremental but small impact for Apple’
Price Target: $US140
“Apple’s Services reveal was materially different than we had anticipated,” analysts led by Rod Hall told clients Monday. “The Apple TV+ service which we expected to be available now was only previewed for Fall availability with no pricing information.”
UBS: ‘Still Some Key Unknowns, But Services Launch Broadens The Narrative + Supports The Multiple’
Price Target: $US215 ($US185 prior)
“While recognising the potential for the stock to consolidate some of these gains post announcement, this is also the start of a broader and deeper services narrative – one that comes against a 900MM+ iPhone installed base, ~600MM of which don’t pay a dime in services,” analysts led by Timothy Arcuri wrote.
They added that “execution and the pricing structure for Apple TV+” are now key questions for investors.
Bank of America Merrill Lynch: ‘New Services announced, but pricing remains a wildcard’
Price Target: $US210
“Given some of these Services are not available until the fall, it is surprising that Apple chose to schedule this event in March,” analysts led by Wamsi Mohan wrote Monday.
They added: “In our opinion, pricing (and possible bundling of services) would in large part determine adoption rate.”
Needham: ‘Apple Poisons Netflix’
Price Target: $US225
Rating: Strong Buy
“Marketing costs – zero. Consumer awareness – 100%. Content budget – $US2B,” analysts led by Laura Martin wrote in a note on Tuesday. “Appearances by Spielberg, Oprah, Aniston, JJ Abrams – priceless.”
They added: “AAPL has zero consumer acquisition costs since it will first target its captive 900mm global unique users, which are the wealthiest consumers in the world.”
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