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Bloomberg
Apple Inc, which saw its shares touch a record high, just earned a new Street-high price target.
Morgan Stanley raised its target to $289 a share from $247 a share, the highest among analysts and implying 20% upside from earlier closing price.
The bank cited Apple’s upcoming TV+ release next month, contrasting with other brokers who have been less positive about the service. “The market view is that with the launch of TV+, Apple is entering a new, more capital intensive market with a low probability of generating a positive return,†analysts wrote in a note to clients.
“We disagree, and see Apple TV+ boosting services revenue growth by two points in FY20, adding one point, on average, to Apple EPS in FY21 and beyond,†they wrote. Apple shares rose 1% to $242.45 setting a new intraday record.
Morgan Stanley’s comments come after a report from Goldman Sachs last month, in which analyst Rod Hall cut his price target on concern that an aggressive pricing strategy for TV+ could trim earnings. Apple said the service won’t have a material impact.
Apple recruited stars including Jennifer Aniston, Oprah Winfrey and Samuel L Jackson for TV+ original productions and may spend as much as $2 billion by the end of fiscal 2020 if it rolls out two shows a month after launch, according to Morgan Stanley estimates. The service can become a $9 billion-dollar-a-year revenue business with 136 million paid subscribers by 2025, the bank said. Morgan Stanley’s price target hike was also driven by a forecast for better iPhone growth. The service can become a $9 billion-dollar-a-year revenue business.