Apple's services business is likely to grow faster than expected as the company monetizes its massive user base, a Wall Street analyst says. Services also could provide a lift to Apple stock.
In a note to clients late Tuesday, Evercore ISI analyst Amit Daryanani said he is more positive on the long-term outlook for Apple's services growth after his firm's survey of more than 3,000 smartphone users.
"Our survey surprised to the upside on both take rates and ARPU (average revenue per user), which increases our confidence that Apple can continue to grow the business at a midteens rate," he said.
There's "plenty of runway" for Apple subscription services such as Apple Music, Apple TV+ and Apple Arcade, Daryanani said. Other services that Apple sells to its more than 1 billion device users include iCloud, Apple Pay, Apple Fitness+ and AppleCare.
Analysts Maintain Buy Ratings On Apple Stock
Daryanani reiterated his outperform rating on Apple stock with a price target of 210.
On the stock market today, Apple stock dipped 0.4% to close at 135.35.
On Friday, JPMorgan analyst Samik Chatterjee maintained his overweight, or buy, rating on Apple stock with a price target of 200.
In a note to clients, Chatterjee said he sees Apple services driving sustained growth for the consumer electronics giant. He forecast services accounting for more than 40% of Apple's revenue in 2030, compared with about 20% today.
Apple stock has a mediocre IBD Composite Rating of 67 out of 99, according to IBD Stock Checkup. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
