The Apple (AAPL) empire could be spearheaded by its flagship product, the iPhone, however together with loads of different {hardware} choices, its Services section has been rising at a quick tempo. There’s additionally speak of a “game changing” AV/VR headset and even of an Apple Car sooner or later.
But Needham analyst Laura Martin thinks there’s additionally the prospect of one other large income stream.
“We believe AAPL is in the early stages of building a new mobile advertising platform,” says Martin, who thinks advert income might be a “material upside value driver” for the tech big for a number of causes.
For one, there’s the offensive component. Apple being the largest firm in the world, to maintain on rising it should deal with large world TAMs (whole addressable markets). As eMarketer expects the world digital promoting market to achieve $600 billion this 12 months, it definitely qualifies as one.
There’s additionally a defensive component, as defined by Martin: “Creating a privacy-first ad platform would solve a problem for AAPL’s ad-driven apps which have seen their ad revs fall after iOS replaced IDFA with ATT in 3Q21.”
It additionally quantities to a intelligent tactical transfer. Apple operates as a “Walled Garden” and its person knowledge is “best-in-class.” All the whereas, it’s also lowering the monitoring and transparency knowledge accessible to different firms. This provides the firm’s “pricing power” a lift.
Martin isn’t just speculating on the matter. There’s proof of Apple’s promoting ambitions, as the firm’s latest job postings suggest a brand new AdTech platform is being constructed. Since the early months of the 12 months, there was a notable improve in the firm’s recruiting exercise for its Ad Platform unit. Just just lately, Apple put up a job opening for “a senior manager for its DSP in its ads platforms business who will drive the design of the most privacy-forward, sophisticated demand side platform possible.” Moreover, Apple made its presence felt throughout June’s Cannes Lions promoting competition. This suggests to Martin, the firm is making an attempt to “drive awareness among marketers that it is in the advertising business.”
So, right down to the nitty-gritty, what does all of it imply for buyers? Martin reiterated a Buy ranking on Apple shares, backed by a $170 worth goal, suggesting shares are pretty valued proper now. (To watch Martin’s observe report, click here)
The Street’s common goal is a contact greater; at $180.11, the determine leaves room for a 9% upside from present ranges. All instructed, based mostly on 22 Buys, 6 Holds and 1 Sell, the stock claims a Moderate Buy consensus ranking. (See Apple stock forecast on TipRanks)
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Disclaimer: The opinions expressed on this article are solely these of the featured analyst. The content material is meant for use for informational functions solely. It is essential to do your individual analysis earlier than making any funding.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.