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[$$] Maxim Group Downgrades Apple on Its Shift to Services

Apple • AAPL-Nasdaq Hold • Price $187.90 on May 29 by Maxim Group We are downgrading Apple’s shares from Buy to Hold because, in our view, the company’s subscription services’ long-term opportunity is not attractive enough, and we expect fiscal 2019 to be a down year. Prior survey data indicate that attach rates for subscription services will be at best 30% and probably lower, given Apple’s “all-encompassing” ecosystem-centric approach, and especially for services where entrenched incumbents already exist. Utilizing Spotify , Dropbox , and Netflix consensus estimates, we believe that Apple subscription services at maturity will yield at best a corporate 25% operating margin.