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TheStreet Open House

Apple WWDC: What Wall Street's Saying

UBS analyst Steve Milunovich (Buy, $700 PT)

"Although the Wall Street view is that smartphones are mature, there is plenty of innovation left in their use. When technologies are new, integration is key to user acceptance. Tim Cook underscored that Apple engineers platforms, services, and devices together, its primary competitive advantage. The iPhone increasingly acts as a digital hub, as with the HomeKit platform. We expect the Health app that collects and passes along vitals to caregiving professionals will be linked to a wearable measuring device given the fashion and healthcare experts Apple has been hiring."

Credit Suisse analyst Kulbinder Garcha (Neutral, $600 PT)

"Yesterday, Apple held its Worldwide Developer Conference (WWDC) 2014 event in San Francisco. It announced a significant update to its iPhone and iPad software in iOS 8 and increased mobile and web integration for the Mac OS in Yosemite. With these announcements, Apple continues to demonstrate how its integration between hardware, software and services across iPhone, iPad and Macs creates a sustainable differentiating advantage versus rival platforms, and effectively enables an up leveling of the OS to the "cloud." This creates a virtuous circle for each of its business lines, high levels of usage and differentiation and allows more devices to be plugged into the platform. Our FY14/FY15 revenue and EPS ests stand at $182.4bn (+6.7%)/$187.2bn (+2.6%) and $44.71/$46.81. We keep Neutral rating and raise TP to $600 from $560."

Canaccord Genuity analyst T. Michael Walkley (Buy, $710 PT)

"We attended Apple's WWDC event in San Francisco where Apple introduced iOS 8 and Mac OSX Yosemite with expanded features and functionality. We believe these initiatives, combined with Apple's recent purchase of Beats Music and Beats Electronics, should drive increased iOS product sales and increase Apple's potential to grow its higher-margin Software and Services businesses. The initiatives should also strengthen the stickiness of the iOS ecosystem among its loyal consumers. In fact, our May surveys indicated continued consumer loyalty resulted in the iPhone 5s remaining a top-selling smartphone at all tier-1 U.S. carriers and at a number of global channels. Further, U.S. surveys indicated tier-1 carrier customers were increasingly opting for early-upgrade programs for more expensive high-tier smartphones, and we believe these trends could enable Apple to charge higher prices for larger-screen iPhone 6 models. Given our expectations for a very strong iPhone 6 upgrade cycle and potential for increasing higher-margin services revenue contribution, we maintain our BUY rating and increase our price target to $710 (14x F2015E EPS)."

JP Morgan analyst Rod Hall (Overweight, No PT)

"Apple rolled out so many new APIs and platform enhancements at WWDC that it is difficult to summarize them in a short note. The emergence of Handoff and iCloud Drive point, in our opinion, to an eventual platform merger (our iAnywhere concept), which would allow an iPad to function as both a Macbook and a tablet device."

Oppenheimer Ittai Kidron (Perform, no PT)

"We view Apple's WWDC announcements and OS improvements as consistent with expectations and neutral for the shares near term. The focus now shifts to the associated hardware announcements, which will come down the road and better shape Apple's incremental growth opportunities (for iPhone, iPad, Mac and with TAM expansion). Apple's fall iOS release timetable is consistent with expectations and suggests the normal September/October iPhone refresh timetable is appropriate. We're leaving our model as is for now, which builds in the normal annual refresh. Reiterate thesis/maintain Perform with a positive bias."

Also See: Apple WWDC Live Blog Recap

Also See: WWDC Sets Up Apple for Big Second Half in 2014

--Written by Chris Ciaccia in New York

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