Apple's event this week provided further evidence that the company is increasingly looking for ways to leverage its "massive" base of around 1.4B active installed devices by layering on more services, Piper Jaffray analyst Michael Olson tells investors in a research note.
He believes that as upgrade rates for Apple devices have lengthened and the predictability of new iPhone uptake has become challenging, the company is pushing high margin and highly recurring services offerings. The analyst's sum-of-the-parts analysis indicates that Apple's services segment, when using comp group average multiples, "is actually more valuable than the product segment."
The analysis provides further evidence that Apple shares have upside to current levels and, potentially, "well into" the $200s, Olson contends.
He maintains an Overweight rating on the stock with a $201 price target. Apple closed yesterday down $1.95 to $186.79.
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