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Apple Inc. Message Board

  • nusaiba nusaiba Apr 17, 2013 11:00 AM Flag

    Lazard Starts Apple (AAPL) at Buy; Most Overlook Key to Sustainable Margins

    Lazard Starts Apple (AAPL) at Buy; Most Overlook Key to Sustainable Margins

    Lazard Capital started coverage on Apple, Inc. (Nasdaq AAPL) with a Buy rating and $540 price target today.

    Analyst Edward Parker notes that most overlook Apple as a storage company. Apple regularly sells NAND flash memory at 80 - 90 percent incremental margins. Parker commented, "We believe Apple's storage model is unique in end user computing and will ensure the company avoids the pitfalls of former handset innovators that are rapidly falling into the annals of history." He also thinks Apple's margins are sustainable, "given Apple’s profit pools are not available to other handset players. As a storage company, Apple sells capacity but prices on the value of that data and the willingness to pay." Though gross margins are currently in a transitional period, the analyst thinks a range of 35 - 40 percent is sustainable. Current valuation of Apple discounts much of the current margin risk.

    Apple's ecosystem of hardware, apps, and cloud services encourages users to store data locally, which Parker notes "is crucial in providing an optimal user exper

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