Why Is Wedbush Bullish on Apple?

Wedbush hopes Apple will take a number of initiatives next year

There’s a lot of negativity surrounding Apple (AAPL) these days. A number of research firms have cut Apple’s target price. The stock has lost ~37% in value since October. However, one research firm that has a different view on Apple is Wedbush. According to 9to5Mac, Wedbush is optimistic about Apple. Wedbush expects that Apple will take a number of positive initiatives to reverse its fortunes:

  • Wedbush hopes that Apple will be able to sell 200 million iPhones in fiscal 2019 and overcome the issues that it’s facing with Qualcomm (QCOM). Wedbush also expects that Apple will lower the price of some iPhone models by at least 25% in order to gain more presence in China’s (FXI) market. Our take – Apple will gain if it lowers some iPhone prices. For iPhones, the replacement cycle is increasing. Higher iPhone prices are discouraging users from replacing their iPhones.
  • Wedbush also expects that Apple’s Services business will hit $45 billion in revenues in fiscal 2019. Our take – Apple’s Services business has become the company’s most important growth driver.
  • Wedbush hopes that Apple will make a meaningful acquisition of a content player in order to gain a presence in the video streaming market. Our take – Although Apple is spending big on producing original content, Netflix (NFLX) is still the leader in the video streaming market. With Walt Disney (DIS) also trying to become an important player in this market, a content player acquisition should dispel some of Apple’s competitive issues.