Apple stock could get 20% more valuable by end of next year, JPMorgan says

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• Apple
  could get 20% more valuable by the end of December
  2019.
• JPMorgan initiated coverage of Apple with an
  “overweight” rating and price target of $272.
• It’s growing services business is driving its upside,
  the bank says.
• Watch
  Apple trade here in real time here.

Apple‘s

trillion-dollar market cap could grow by 20% by the end of
next year. 

That’s according to JPMorgan analyst Samik Chatterjee,
who initiated coverage of the tech giant with an
“overweight” rating and $272 price target for December 2019.
Apple’s stock was up more than 2% following the news. 

“While Apple’s leadership position in the premium smartphone
market is well understood by investors, we still see considerable
upside to the stock from current levels,” Chatterjee
said in his Thursday note to clients.

Apple, classically a hardware and devices company, is in the
midst of what
looks a shift to services.

“Apple has historically been regarded as an IT Hardware company
tied to a short product refresh cycle of the iPhone in an
extremely competitive smartphone industry,” Chatterjee wrote.

“More recently, investors have been proved wrong on the pace of
Apple’s transformation to a services company, with revenues in
the Services reporting segment increasing from 8% of total in
FY12 to an estimated 20% of total in FY21E.”

The company’s services business includes App Store, Apple
Music and Apple Pay. Apple also plans to expand
its media offering with video and print media
content.

According to the JPMorgan, the company could potentially see more
acquisition activity in near future.

“Apple’s interest in entering new end-markets is likely to be
evaluated based on the opportunity to offer services on a large
installed base,” he said. “Certain end-markets in our view could
be of interest, including gaming services, automotive services,
and smart speakers.”

Chatterjee also points out that a combination
of stronger-than-expected price increases in the core
iPhone business, continuous innovation disrupting new markets, a
strong balance sheet, and share repurchases could boost shares by
the end of next year.  

Apple has been one of the top-performing S&P 500 stocks this
year, gaining more than 30%.

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