Apple (AAPL) kicked off its annual developer conference on June 22, a virtual event in true 2020 style. As expected, the tech giant announced new developments and software updates.
Oppenheimer analyst Andrew Uerkwitz logged in to get the lowdown. The 5-star analyst logged off with some key takeaways in tow.
Among the new features announced for iOS 14, the latest software update, Uerkwitz sees the introduction of App Clips as the most significant. The feature gives users access to certain functions of an app without the need to download it first or create an account.
“With integrated Apple Pay, the feature will enable a more seamless and accessible digital and physical experience,” Uerkwitz noted.
Other new features include improved Home Screen navigation, a data rich Widget, a picture-in-picture feature (which plays a small video in the screen’s corner while the user performs other tasks), and a makeover for the Siri interface.
Apple also confirmed it will begin using its own processor in Macs for the first time, discarding the Intel x86 processors it had previously relied on. The move to Apple’s ARM processors will begin later this year with the release of the first Apple Silicon powered Mac. It should be noted that the transition process is expected to last two years.
Marking the first step of integration between MacOS and iOS ecosystems, the move could prove to be a significant catalyst.
Uerkwitz said, “The historic move validates our view that Apple is creating a wide moat for its own ecosystem by deeper integration of hardware and software, and broader integration across all of its hardware devices… A shared hardware-software architecture across Apple devices will likely benefit existing users, encourage more purchase within the ecosystem, and amplify the network effect for App Store and its third-party developers.”
All in all, Uerkwitz has an Outperform rating along with a $320 price target on the stock. The figure reflects downside potential of 13%. To be fair to Uerkwitz, even for an Apple bull, it is currently hard to keep up with the stock’s price. Apple’s share gains are coming in thick and fast, and the stock is currently at an all-time high, yet again. (To watch Uerkwitz’s track record, click here)
The rest of the Street is playing catch up, too. The analyst consensus rates Apple a Strong Buy based on a resounding 28 Buys versus 6 Holds and 1 Sell. However, the $348.63 average price target implies shares could drop by 5% in the coming months. (See Apple stock-price forecast on TipRanks)
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Crypto could take another step towards mainstream adoption if new reports from CoinDesk turn out to be true.
On June 22, unconfirmed reports began making the rounds indicating PayPal (PYPL) will facilitate the buying and selling of cryptocurrency on its Venmo and PayPal platforms. With 325 million active accounts, the move - which could take place over the next three months - will position the company as a direct competitor of Square’s Cash App. Since launching Bitcoin trading in 2018, the Cash App has been a storming success.
The move is not an unexpected one, claims Rosenblatt Securities analyst Kenneth Hill.
“We are not surprised by the potential addition, and we believe a crypto offering will fit well with PYPL's user base (particularly Venmo users). SQ's Cash App monetization efforts serve as an effective blueprint of how to better monetize what had been a historically P2P user base. As the product evolves, we expect to see more substantial efforts made to extend product functionality to further engage and attract clients, in addition to adding services geared at monetizing those on the platform,” said the 5-star analyst.
Although PayPal subsidiary Venmo boasts more users than its P2P competitor, with it estimated to have 50 million MAUs (monthly active users) vs. the Cash App's roughly 30 million, Square has been able to better monetize its platform. Hill reckons Cash App’s average revenue per user (ARPU) is more than 3x that of Venmo’s, illustrating the potential of the new initiative.
The addition of Bitcoin to the Cash App has resulted in increased engagement levels, and brought in more customers, a fact that is not lost on Hill.
“We believe a crypto trading offering will drive higher levels of engagement among Venmo’s young user base and potentially lead to improved monetization over time,” the analyst concluded.
Accordingly, Hill reiterated a Buy rating on PayPal, accompanied by a $163 price target. The figure, though, implies downside potential of 6% from current levels. (To watch Hill’s track record, click here)
Based on 23 Buys and 7 Holds, PayPal has a Strong Buy consensus rating. However, as is increasingly common in the current bubbly market, PayPal has just notched an all-time high (while also up by 60% year-to-date), so targets have been left eating dust. Therefore, the average price target of $160.85 indicates possible downside of 6%. (See PayPal stock analysis on TipRanks)
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