Apple Inc. (NASDAQ:AAPL) has been on a nice rally of late, and some analysts are starting to see signs that the company will be heading back toward its all-time high of a little over $700. Rob Cihra of Evercore Partners raised his target price for the company’s stock from $630 to $700 per share.
Apple getting momentum back
The analyst believes the refreshes of the iPhone and iPad have helped Apple Inc. (NASDAQ:AAPL) get its momentum back while also enabling it to stabilize its gross margins. In addition, he believes the company still has even more opportunities to add value to the iOS ecosystem. He calls the company “king of monetization” thanks to its “multiple points of unique leverage.”
Cihra notes that Apple uses the strategy it follows with iTunes for most of its monetization efforts. It drives more hardware, but the company’s App Store and iOS ecosystem as a whole provide areas which Apple can leverage for more revenue. He sees opportunities in measuring user behavior for advertising and also payments, both for offline and online transactions.
Apple’s iOS versus Android
The analyst also notes that while the Android platform leads in number of app downloads, potentially taking an estimated 60% share for the 2014 calendar year, iOS still sees more revenue from its apps. He estimates that iOS receives more than two times the revenue monetization from its apps downloads. The analyst projects that Apple Inc. (NASDAQ:AAPL) will take about 63% of the revenue monetization from apps during the 2014 calendar year.
That amounts to approximately $4 billion, which would be a 27% increase year over year in app revenue alone. The company takes 30% of all revenue from apps sold in its App Store, which is estimated to be around $14 billion in market sales for iOS. He says although this is only 2% of the company’s revenue mix, this shows just how important it is for Apple to push iOS.
What about Apple and China Mobile?
Cihra also weighs in on the expected deal between Apple Inc. (NASDAQ:AAPL) and China Mobile Ltd. (NYSE:CHL) (HKG:941). He estimates that the deal will add between 80 cents and $1.70 per share upside to his 2014 calendar year estimate. At this point he has included just 5 million iPhones on the China Mobile network, but he sees the possibility of the deal adding an extra 5 million to 10 million.
