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Why The Apple One Mega-Bundle Is A 'Clever Marketing Decision'

Shanthi Rexaline

After months of speculation, Apple Inc. (NASDAQ: AAPL) unveiled its Apple One subscription bundle at its "Time Flies" event Tuesday.

The Apple Analyst: Needham's Laura Martin maintained a Buy rating on Apple and increased the price target from $112.50 to $140.

The Apple Takeaways: Wall Street often underestimates the value of "clever marketing decisions" like the Apple One mega-bundle, Martin said in a Wednesday note.

The Apple One subscription bundle includes Apple Music, TV+, Arcade and 50GB of cloud storage for $15 per month per person.

A $20-per-month payment covering the base package plus 150GB more in iCloud storage and the new Fitness+ service and is meant for a family with up to six members, the analyst said. 

A Premier plan priced at $30 per month adds Apple News+ and 2TB of cloud storage to the previous tier, she said.

The plan is $25 cheaper per month than buying each service individually, Martin said 

Subscribers get a 3% monthly rebate if they pay through Apple Card, the analyst said. 

"In every new device, Apple Silicon drives more differentiated attributes, which improves on-ramps into AAPL's ecosystem and elevates its pricing power."  

The new Fitness+ service and the Apple One mega-bundle should help grow Services revenues faster, she said.

Needham sees Services as driving upside valuation for Apple in three ways: making the company's ecosystem stickier, thereby reducing churn; increasing the lifetime value of the company's 950 million installed base of customers; and supercharging free cash flow growth.

Services carry a 67% gross margin compared to a 30% margin for products, Martin said. 

AAPL Price Action: Apple shares were trading down 0.98% at $114.41 at last check Wednesday. 

Related Links:

Apple Analysts See 'Once In A Decade' Opportunity Ahead Of iPhone 'Supercycle'

Apple Analysts Say It's 'Difficult For Investors To Step Away' With Further Upside Potential

Photo courtesy of Apple. 

Date

Firm

Action

From

To

Sep 2020

Needham

Maintains


Buy

Sep 2020

B of A Securities

Maintains


Neutral

Sep 2020

JP Morgan

Maintains


Overweight

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