Analyst Laura Martin is bullish on the Cupertino, Calif., company's services and wearables segments.
"Loan-to-value upside is being driven by services and wearables, which enhance [the] Apple ecosystem lock-in" and add to revenue per user, the analyst said.
"Apple's strong balance sheet, free cash flow, and share repurchases moderate investor risk," Martin wrote.
The analyst also notes that Apple's platform aggregates 950 million of "the wealthiest consumers globally."
In January 2020, Apple reported having 1.5 billion active devices, up from 1.4 billion a year earlier. Needham estimates about 964 million of those devices are iPhones.
The firm further estimates that over an 11-year period in the Apple ecosystem, a user would buy about three new iPhones at an average $800 each, assuming a four-year replacement cycle.
iPhone sales represent $2,400 of revenue at a 31% gross margin over the time period.
Non-iPhone product sales add 55.6% to Apple active device sales at an average selling price of $700 each.
"The right way to think about AAPL’s valuation, pricing power, competitive advantage period and barriers to entry (our view) is through the lens of its ecosystem dominance among the wealthiest smartphone owners in the world," Martin wrote.
"For any ecosystem, the value equation is
- unique subs times revenue/sub/year times years spent inside the ecosystem."
Needham says the biggest upside for the ecosystem comes from reduced churn - users moving to other brands.
Apple shares at last check rose 1.7% to $394.76.