Apple shares got a boost on Thursday (March 21) after Wall Street investment firm Needham raised its rating from "buy" to "strong buy."
According to a report from CNBC, Needham said it raised its rating on the Cupertino, California iPhone maker due to the value it sees in Apple’s ecosystem.
"We anticipate better than previously expected results from both Services and Wearables, Home and Accessories, as well as valuation upside created by falling churn and strong barriers to entry,” Needham Analyst Laura Martin said in a note to investors.
Needham raised its price target for Apple’s stock to $225 a share from $180 a share. The call comes as Apple has been seeing sluggish sales of its iPhone, particularly in China. A combination of a high price tag, a saturated smartphone market and low-cost competitors has created pressure for the company. Lackluster demand has weighed on the stock as well. Even the upgrade didn’t do too much to boost shares, with the stock recently up 2 percent.
With slumping iPhone sales, Apple has been setting its sights on services – which encompasses everything from iTunes to Apple Pay – to drive revenue and expand into new markets. On the Apple Pay front, the company has been inking partnerships to boost adoption rates.
According to Needham, Apple’s launch of new products should lift the stock. At an event next week, Apple is expected to roll out a new TV streaming service, which will initially give owners of iPhones and iPads free access to original shows, reported CNBC.
Needham thinks the streaming service will result in “higher lifetime value” for its 900-million-strong user base. "Our 1Q19 proprietary survey tells us that, whether or not Wall Street believes AAPL is an ecosystem company, its users do," Martin wrote in the research note.