Having maintained an Overweight or Outperform rating on Apple (AAPL +0.5%) shares since 2004 and now departing Piper Jaffray to co-found a venture capital firm, Munster issues a farewell briefing on the company.
Spotlighting Apple's transition from PC to mobile, he considers not much to change should similar successful evolution not take place regarding its services segment. Despite 24% Y/Y growth for the unit in Q4, notes a challenging path for investors to appreciate Apple as a service business (over hardware) without it comprising at minimum 30% of total revenue. To be viewed as a full-scale services operation, cites a 50% level. Further: "We don’t know what the right answer is, but feel confident the management team will figure out the best forward path to optimize the Services story."
On iPhones, projects the 7 to have greater unit growth than consensus for the forthcoming March and June quarters and next year's iteration to "be compelling enough to sustain high single-digit to low double- digit unit growth."
Though a final note as member of Piper Jaffray, Munster's new venture will continue to offer research on major technology companies and startups within its purview.
Update: Piper Jaffray (Michael Olson) resumes Overweight coverage on Apple with a $155 target (current price $116.05).
Now read: Apple: Gearing Up For New Highs »
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