Macquarie analyst Ben Schachter initiated coverage of Apple last night, giving the stock an outperform rating, and a price target of $US630.
Schachter’s bullish forecast is built around the success of iTunes, and services, which he thinks will be a profitable, high-growth business. He thinks the hardware business growth will fade. The iPhone will see single-digit growth, and the iPad and the Mac might stop growing altogether.
He builds his entire forecast around the current line of products. He doesn’t forecast products that don’t exist because … um, they don’t exist.
However! He does list six categories where he thinks Apple could attack and create new, high-growth businesses. In case you’re wondering what people think the future holds for Apple, here’s a peek.
Apple recently rolled out CarPlay, which is similar to AirPlay for the Apple TV. It projects a version of Apple’s software onto the screens of a car’s dashboard. Right now this is in the earliest of stages, but if it’s well done, and widely adopted, it’s key for the Apple ecosystem. Apple doesn’t make money off it right now, but it reinforces usage of the iPhone. It also opens the possibility for Apple to figure out how to monetise it down the road.
2. APPLE TELEVISION
Apple is going to do something with TV eventually. It has to, right? Schachter thinks at the very least we’ll get an updated Apple TV with gaming and an App Store in the near future. He thinks Apple could sell a lot of apps and content through an updated Apple TV. He also thinks Apple could release a large-screen HDTV, though he cautions that his colleagues in Asia who track the supply chain are sceptical it will ever happen.
Apple is reportedly hard at work on an iWatch. So far, consumer interest in wearable devices has been tepid. The hope is that Apple nails the hardware and the reasons for owning a smartwatch. This has always been Apple’s strong suit — looking at a market, seeing how the competition has screwed it up, then swooping in with the product consumers really want.
4. MOBILE PAYMENTS
Mobile payments have always been a fragmented, messy situation. But Apple’s has laid the groundwork to do something big. It has the fingerprint scanner on the iPhone for security. It has iBeacons, which is a Bluetooth-based communications platform for smartphones indoors. Schachter predicts something with mobile payments happens in the coming year.
5. HOME AUTOMATION
Apple’s iOS software could extend to other parts of the home. Schachter predicts “products focusing on energy, healthcare/fitness, security/monitoring, entertainment, etc.” When Google bought Nest, a lot of people were surprised because it seemed like the sort of thing Apple would want. Perhaps Apple passed on Nest because it plans to do its own home automation products.
6. EXCLUSIVE MEDIA CONTENT
Apple has a massive pile of cash. Instead of just returning the money to shareholders, it should spend that on a few exclusive content deals. Schachter says that Halo was an exclusive franchise for the Xbox and it was a big key to the Xbox’s success. If Apple did that with a few pieces of content, it would drive people to Apple products like Apple TV, iTunes Radio, iPhones, and iPads.