Apple (AAPL) Stock Gains, Goldman Adds to ‘Conviction Buy’ List

Apple (AAPL) stock is increasing after it was added to the ‘conviction buy’ list at Goldman Sacks.
By Amanda Gomez ,

NEW YORK (TheStreet) -- Apple (AAPL) - Get Report stock is rising 1.8% to $115.74 in early morning trading on Wednesday after the company was added to the "conviction buy" list at Goldman Sachs.

The firm maintained its $163 price target as the company is expected to see growth from recurring revenues from its iPhone installment plans.

Unit growth is expected to slow because the smartphone market is maturing, Goldman Sachs said in an analyst note.

Apple has an estimated 500 million loyal iPhone users, which will fuel growth of services such as television, music streaming and payment applications.

The strong customer base will also drive sales of other devices, including the Apple Watch and iPads.

Apple could have average revenue per user of up to $153 per month for each customer who uses all of the company's hardware and services, analysts estimated.

Separately, TheStreet Ratings team rates APPLE INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

We rate APPLE INC (AAPL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, robust revenue growth, notable return on equity and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • APPLE INC has improved earnings per share by 38.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, APPLE INC increased its bottom line by earning $9.20 versus $6.43 in the prior year. This year, the market expects an improvement in earnings ($9.89 versus $9.20).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Computers & Peripherals industry average. The net income increased by 31.4% when compared to the same quarter one year prior, rising from $8,467.00 million to $11,124.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 25.6%. Since the same quarter one year prior, revenues rose by 22.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Computers & Peripherals industry and the overall market, APPLE INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • 45.95% is the gross profit margin for APPLE INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.59% is above that of the industry average.
  • You can view the full analysis from the report here: AAPL

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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