This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Why Apple Is a Buy Because of Mobile Payments

Stocks in this article: AAPL AXP MA V

NEW YORK (TheStreet) –– Investors may want to go long Apple (AAPL - Get Report) should the company announce a mobile payments strategy at its event next week, according to Barclays Capital analyst Ben Reitzes.

Apple is widely expected to announced two new iPhones on Sept. 9, but speculation has also intensified following several reports Apple is working with payments companies Visa (V) , Mastercard (MA) and American Express (AXP) , which Reitzes believes could capture the attention of Apple's increasingly large customer base. "We look for the event to showcase larger iPhones with a set of key new features that could get the customer base more excited," Reitzes wrote in the note. "Aside from solid new hardware specs, we believe Apple could unveil a long-awaited payments offering, linking NFC to iBeacon technology, leveraging the company's vast trove of credit card information within iTunes." Reitzes rates Apple shares "overweight" with a $110 price target.


WATCH: More feature videos on TheStreet TV

Apple shares were lower in early Thursday trading, off 0.29% to $98.94, following a 4.2% decline on Wednesday.

Apple CEO Timothy D. Cook has hinted the company could look into mobile payments, via TouchID, which was introduced on the iPhone 5s. "The mobile payments area in general is one that we've been intrigued with, and that was one of the thoughts behind Touch ID," Cook said on a Jan. 27 earnings call. "But we're not limiting ourselves just to that. So I don't have anything specific to announce today, but you can tell by looking at the demographics of our customers and the amount of commerce that goes through iOS devices vs. the competition that it's a big opportunity on the platform."

Read More: Apple's Next iPhone: What We Think We Know

Apple's iTunes platform has more than 800 million accounts with credit cards linked to them, potentially making this a lucrative area for Apple. Forrester Research expects the U.S. mobile payments to reach $90 billion by 2017, indicating there is space for additional companies to enter the space.

As Apple moves into additional software and services, i.e. payments, shares could get a higher earnings multiple than are presently afforded to them. According to the report, payments-related companies trade at an average of 21 times 2015 earnings estimates, versus 12 times (excluding cash) for Apple. "If Apple can be viewed more as a payments enabler, accumulating data with the potential for multiple revenue streams, its multiple could benefit," Reitzes penned in the note.

The note comes one day after Pacific Crest Securities analyst Andy Hargreaves recommended taking profits going into the event, stating, "Unless next week's event details massive incremental profit opportunities, we are likely to downgrade AAPL's rating." However, Reitzes disagrees, stating that this "this cycle is obviously much bigger and more important than the last two - and shares could work well into CY15."

Read More: Apple iPhone 6: What Wall Street's Saying

--Written by Chris Ciaccia in New York

>Contact by Email.

Follow @Chris_Ciaccia

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,449.86 +62.65 0.36%
S&P 500 2,032.72 +3.17 0.16%
NASDAQ 4,709.3290 +27.8320 0.59%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs