Analyst Laura Martin maintained a buy rating and $170 price target on Cupertino while lowering her iPhone 13 shipment estimates for calendar Q4.
"We argue that the best way to think about AAPL’s valuation, pricing power, competitive advantage period and barriers to entry is through the lens of one billion-plus of the wealthiest consumers in the world, each using AAPL devices 3 to 5 hours per day," she wrote in a report.
But due to the lower iPhone shipments, revenue in the quarter will fall, the analyst said. Needham pared its fiscal 2022 revenue estimate 5% to $359.2 billion, indicating a 1% year-over-year decline.
Martin says that despite the supply-chain issues, Apple is driving a wider multiple by diversifying its hardware on-ramps into the Apple ecosystem; lowering churn -- customers turning to rival providers -- by adding utilities like Apple Pay and Apple Care; and by maximizing revenue per Apple user through subscriptions.
"For any ecosystem, the value equation is unique [subscriptions] times revenue/sub/year times years spent inside the ecosystem," Martin said.
"Two key important valuation upside drivers are falling churn, because it elongates time spent inside the ecosystem, which drives upside to lifetime value (LTV/user), and add-ons that grow [revenue] per unique user," she said.
Shares of Apple at last check were rising 0.9% to $142.16.