Morgan Stanley analyst Katy Huberty (Katy Huberty) today raised its forecast for Apple’s service-related revenue until the fiscal year 2022. In a research report, Huberty said that stronger licensing revenue is the main driving force for the upward revision, including the accelerated increase in Apple’s search traffic-related payments from Google.
The New York Times reported last year that Apple will receive an estimated $8-12 billion each year in exchange for Google to become the default search engine on devices such as iPhone and iPad.
Huberty wrote: “After the strong third-quarter App Store performance and analysis of the key drivers of Apple’s licensing and other departments, we have increased our service revenue expectations for FY21 and FY22, which are already higher than market expectations, by 3 % And 5%, and increasingly believe that the revenue forecasts for service items in the next two years are too low.”
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Although optimistic about the outlook for Apple’s services, Huberty lowered Apple’s 12-month target price from US$164 to US$155 per share.
“However, the multiple compressions in the past two months, mainly due to Apple’s high-growth service peers, exceeded our higher revenue and profit expectations, pushing our new target price based on the sum of parts to fall from the previous $164. $156, or 33 times the earnings per share for fiscal year 22.” Huberty wrote.
Apple’s service portfolio includes App Store, Apple Music, Apple TV+, Apple News+, Apple Fitness+, Apple Arcade, iCloud, etc.
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