Apple shares are trading lower in the US Monday, as an analyst initiates a ‘Buy’ rating on the tech stock. Jefferies said that Apple is well placed to create a lucrative services business on the back of its now well established, core iPhone proposition.
By 1625 BST, Apple shares were 0.05% lower at $216.20. The stock has been trending lower in recent weeks.
Apple rated ‘Buy’
Earlier Monday, Jefferies analyst Timothy O’Shea rated the Apple stock as a ‘Buy’. He said there remains room for further growth from the tech innovator and that it can build upon its strong iPhone foundation.
“We believe AAPL's stable iPhone business will serve as the foundation upon which it can build a massive, recurring and high margin Services business,” O’Shea said in a research note.
“Applying a higher multiple compared to the lower margin hardware business, we see a significant opportunity for investors as Services alone could be worth $111 to $177 per share by that time,” he said, adding: “Services growth will be led by App Store and Apple Music, and we see an opportunity to introduce new services over time.”
O’Shea has a 12-month target price of $265 on the Apple stock.
Apple behind in Qualcomm royalty payments
Separately, chipmaker Qualcomm said in a court heating Friday, that Apple is some $7 billion behind in patent royalty payments to it.
The two tech firms are embroiled in a legal battle over patents; Apple accuses Qualcomm of unfair patent terms and licensing practices, while Qualcomm accuses the US giant of patent infringement.
Apple disputes the amount of royalties it owes Qualcomm, saying the chipmaker is making the US firm pay twice for the same patents.
Qualcomm raised complaints about the amount of royalties still owed to it by Apple at a Federal court hearing in San Diego.