New Approach for Apple (NASDAQ:APPL)
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In the beginning of the year, speculators weren’t sure how the year for Apple (NASDAQ:APPL) was going to turn out. As after many promises, nothing new was entering the market. But then in September, Apple (NASDAQ:APPL) announced it iPhone 6, iPhone 6 Plus, iWatch and Apple (NASDAQ:APPL) Pay. And in a matter of days, Apple (NASDAQ:APPL) proved that it lived up to expectations. Even though the result for iWatch and Apple (NASDAQ:APPL) Pay’s success is yet to be determined, the iPhones took the world by storm, with people lining up outside the shops for hours and pre-orders setting new records. Apple (NASDAQ:APPL) officials were more than happy with this response. Its shares are still being traded at $110, which is the highest it has ever gotten with pre-split prices at $770.
Analysts from UBS have revised the Apple (NASDAQ:APPL) rate, adding an additional $10 to their target price, bringing the figures to $125.
The reason they give for this suggestion is that survey carried out in the US, UK and China, to measure the ongoing iPhone 6 demand. The sample size used for the survey was 1000 respondents, of which 40% showed the desire to buy an iPhone within the next year. Out of the 40%, half want to get their hands on the iPhone 6 Plus. Within the Chinese market, presumably one of Apple (NASDAQ:APPL)’s most important market, 29% of the respondents want an iPhone 6 and a large number showed willingness to switch from the Samsung (OTC:SSNLF) Android phone to the iPhone. This shows that iPhone is stealing away market share from its South Korean rival. And it won’t be long when iPhone will lure in users from other rivals too.
Another positive aspect for Apple (NASDAQ:APPL) is its large loyal consumer base. These die-hard fans have being generating revenues for Apple (NASDAQ:APPL) for year. At this point according to UBS, the company’s retention level is 84% which is double the number when compared to Samsung (OTC:SSNLF) or Xiaomi. Another suggestion that the analysts provide for Apple (NASDAQ:APPL) is that it could easily generate twice as much revenue as it does now by simply turning Apple (NASDAQ:APPL) into a subscription business with low churn.
For many, this notion might not make sense but as Apple (NASDAQ:APPL) customers are very loyal, the business could easily put that to its advantage as they will continuously upgrade their devices on a yearly basis.
Apple (NASDAQ:APPL) already is using subscription method to account for iPhone sales. Back then Apple (NASDAQ:APPL) revenues were delayed by 2 year and this was the only time when they were able to produce non-GAAP figures. Apple (NASDAQ:APPL) wanted to implement rules that align with its business and economics. Hence, it played a battle with the Financial Accounting Standards Board and in 2009 these rules were amended. But the ballpark back then was set at $20 per unit. Another approach could be that Apple (NASDAQ:APPL) starts to report its data around the same time it launches upgrades and renews to gain respect from investors.