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Apple Rises on Upcoming Streaming Event Buzz & Device Updates

Apple’s AAPL shares have rallied 23.6% year to date, outperforming the S&P 500 composite’s growth of 13.4%. The momentum can be attributed to the buzz around its upcoming event on Mar 25, where the iPhone-maker is expected to launch the much-anticipated video streaming service.

Moreover, the move to update and upgrade its iPad and iMac devices along with the recently revealed next-generation AirPods helped Apple in gaining attention of investors and Wall Street analysts.

Upcoming Streaming Service: Key Catalyst

Apple’s video streaming service is likely to comprise a generous dose of free original programming along with subscription-based streaming offerings like CBS Showtime, Starz and Viacom.

Although Netflix NFLX and Hulu are not expected to be part of Apple’s offering, the service has garnered significant buzz due to collaborations with Hollywood celebrities like Jennifer Garner, Reese Witherspoon, Jennifer Aniston, Chris Evans, Jason Momoa, Steven Spielberg and J.J. Abrams.

Reportedly, Apple has spent roughly $2 billion on its content (either through producing or acquiring) and inked a multi-year content deal with Oprah Winfrey. Per Macworld, Apple spent $1 billion on original TV programming in 2018.

Apple is also expected to launch a news service on the same event. Per Bloomberg, Vox is part of the upcoming service that will cost users a monthly subscription. However, according to a Reuters article, the service will not feature The New York Times.

Further, Apple is expected to announce a credit card partnership with Goldman Sachs.

Analyst Expectations High for Apple’s Service

Needham analysts, Laura Martin and Dan Medina upgraded Apple’s shares from “Buy” to “Strong Buy” and price target from $180 per share to $225. They believe that the to-be-announced streaming service “could attract new users to Apple’s ecosystem.”

Apple's streaming video offering is a “pivotal step” as the company looks to boost its services business, according to Wedbush analyst Daniel Ives, who has an Outperform rating on the stock.

Apple’s shares increased 3.7% to close at $195.09 on Mar 21, which, per CNBC, is its biggest rally since January. Although it failed to dislodge Microsoft MSFT from being the world’s largest company, the stock is on the threshold of hitting $1 trillion again, as it had a market capital of $958.89 billion as of Mar 21.



Device Updates Strengthen Portfolio

Apple’s next-generation AirPods are powered by the new H1 chip and are expected to provide 50% more talk-time compared with the earlier version. Due to the H1 chip, the new device is likely to have better connectivity with iPhone or iPad.

The model also offers hands-free support due to integration with Siri. Users can now simply talk to Siri to make a call or request music instead of tapping one of the Airpods, which was required in the older model.

Apple is also rumored to launch its much-awaited AirPower, which is a pad capable of charging the iPhone and other devices. AirPower was unveiled in September 2017 and expected to be launched in 2018. Per CNBC, which quoted The Wall Street Journal, Apple has given nod for the production of AirPower.

Zacks Rank & A Key Pick

Currently, Apple has a Zacks Rank #3 (Hold).

Lenovo LNVGY is a better-ranked stock in the same industry. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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Netflix, Inc. (NFLX): Free Stock Analysis Report
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