Apple is primarily a smartphone company.
They have other wonderful products, but the iPhone is steadily growing as a source of the company’s revenue and earnings.
But at least one major bank sees huge upside in other Apple products next year.
“We believe ‘services’ is an area within Apple that has strong potential to grow with other yet to be announced initiatives that have close to 100% margins,” wrote Barclays analyst Ben Reitzes.
In particular, Reitzes says that Apple Pay will be a massively profitable business, which will help margins if Apple can expand it. Reitzes also expects a subscription video service, similar to the Beats service for audio which Apple is reportedly going to push to all iPhones next year.
“A more comprehensive media service to integrate TV and subscriptions seem like a no brainer at some point,” says Reitzes.
Barclays also expects Apple’s margins to benefit from the Apple Watch, which will have some high-priced options, and as phone and tablet buyers shift to bigger-screened devices, like the iPhone 6 Plus and the full iPad (rather than the iPad mini). Barclays is particularly bullish on the iPad 6 Plus in China next spring.
Barclays raised its price target on Apple to $US140 from $US120 per share, a whopping vote of confidence in the company’s plans for 2015 and beyond.