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JP Morgan forecasts robust growth in Apple services segment

04 October 2018

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by Anchor

J.P. Morgan last week initiated coverage of Apple with a Buy rating, forecasting strong growth for its services offerings. Analyst, Samik Chatterjee writes in a report entitled Time for Apple Picking: Initiate OW on Compelling Services Transformation, Ripe Installed Base, Core Capital Deployment, that Apple is “transforming from a hardware company to a services company faster than investors had expected, which is driving financial and valuation upside,”.

The company’s services business includes its App Store, Apple Music and Apple Pay offerings and in 3Q18 it accounted for % of total Apple revenue

JP Morgan started its target price (TP) at $272, representing 17% upside to Wednesday’s (3 October’s) close. The analyst said Apple’s services sales rose to 13% of its FY17 revenue vs 8% in FY12 and predicts the segment will rise to 20% of sales by FY21.

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