Cowen presented key highlights from Apple’s WWDC 2016
Following Apple Inc.’s (NASDAQ: AAPL) World Wide Developer’s Conference (WWDC) 2016 on Monday afternoon, sell-side firm, Cowen, has reiterated Outperform rating for the company along with a price target of $125. Analyst Tim Arcuri at Cowen presented key notes from Apple’s WWDC, which are presented below.
Firstly, on watchOS 3 improvements, Apple demonstrated new Operating System (OS) while maintaining its key focus towards personal wellbeing. This appears to be a major improvement over Apple’s current watchOS 2 in terms of its functionality and speed.
The additional features in the new watch include in-app Apple Pay integration and method for unlocking nearby Macintosh. According to the demo, it appears that the user experience would be improved via the new OS, while sell-sides units forecast for the company remain unchanged at around 21 million units for the year, higher than 12 million on Year-over-Year (YoY) basis.
Secondly, the company focused on Apple Pay. It announced to open its Apple Pay for online transactions via Macintosh OS, which would help the company to tap the online or mobile payment markets, which according to PayPal is estimated at around $1.3 trillion.
By the help of Apple Pay, Macintosh users would be able to shop and purchase online, and later pay in order to complete the transaction through Apple Pay via a touch ID on iPhone. Apple Pay offers enhanced online payment security compared to its competitors.
Moreover, sell-side mentioned that assuming 0.15% fee for Apple Pay, it would mean additional $2 billion in revenues (which is lower than 1% of company’s total revenues) if all the business flowed via Apple. In addition, it mentioned that Apple would like to maximize its revenue from Apple Pay, but in order to strengthen its footing and expand, the key is to sell more hardware.
Thirdly, key focus was towards Macintosh OS ecosystem integration. As per company’s announcement, it has introduced several Mac OS features that would integrate Apple ecosystem and provide convenience by enabling and facilitating simultaneous use and seamless integration of workflow of many Apple devices such as Siri integration, iCloud drive, etc.