Apple (AAPL) on Thursday was upgraded from a “Buy” to a “Strong Buy” by Needham ahead of an event on Monday where the tech giant is expected to unveil its long-awaited TV streaming service.
“On Monday (3/25/19), AAPL will announce a new content service that, IF adopted by its users, should lower churn and drive higher lifetime value for each of AAPL’s 900 million unique ecosystem users,” wrote Needham analysts Laura Martin and Dan Medina, who speculated the service could attract new users to Apple’s ecosystem.
Needham also raised its price target from $180 per-share to $225 per-share. Apple shares rose over 3% on Thursday.
Free and paid Apple services including Apple Pay, Apple Music, AppleCare+ and Apple Books double the value of each Apple user over the years of their ownership of a device, with each user expected to spend an average of eight years inside Apple’s ecosystem, according to Needham.
Apple’s services business brought in more than $10.9 billion during its fiscal first quarter 2019, setting records in “every geographic segment” Apple CEO Tim Cook said.
According to Needham, Apple generally earns $1,559 in total profits off of each iPhone user over the course of the time that user owns their smartphone, with services profits accounting for 52%, or $816, of the total mix.
Apple this week unveiled upgrades to its iPad Air and iPad Mini tablets, as well as new AirPods. The announcements arrive on the heels of the unveiling of its streaming service, which is comparable somewhat to Netflix (NFLX) and Amazon’s (AMZN) Prime Video on Monday. The tech giant reportedly invited A-list Hollywood celebrities including Jennifer Aniston, Reese Witherspoon, and director JJ Abrams, according to a Bloomberg report.
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