Credit Suisse upgrades Apple stock

Credit Suisse analyst Shannon Cross on Wednesday raised the firm’s rating on Apple to “Outperform” (buy) from “Neutral,” offering four reasons for the upgrade.

Ben Levicohn for Barron’s:

1. A lot of people use Apple devices. Cross noted that more than 1.8 billion iPhones, computers, and the like are in circulation, which helps spur uptake of the company’s services and software, while also keeping them around as customers.
2. Apple’s services business will help its profit margins… The company’s services segment generates a gross margin of more than 65%.
3. Overall margins aren’t too shabby either — and should continue growing. “We estimate gross margin will continue to trend around 43%, with inflation and currency headwinds offset by higher Services revenue (growing double digits) and vertical integration of components,” Cross said.
4. Apple has a ton of cash. Apple is sitting on about $192 billion in cash, which should allow it to do whatever it needs to do to drive returns.

MacDailyNews Take: B-I-N-G-O on all four cards. Cross has set a target price on Apple of $201, which would take the company back above the $3 trillion valuation mark it first hit back in January.
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