Morgan Stanley Says Apple’s TV Service Will Do This

According to Morgan Stanley, Apple has a lot to look forward to with its TV service.

The firm believes that the service will grow like crazy and turn into a $9 billion business by the year 2025.
Morgan Stanley predicts that Apple TV+ could be a $9 billion-per-year business by 2025, even with conservative sign-up estimates. The service is expected to launch in November and will cost $4.99 per month.

The firm raised its price target on shares by 17% and now has the highest price target among 33 analysts that cover the stock. The price target has increased from $247 to $289 a share.

Analyst Katy Huberty predicted in a note distributed on Tuesday that Apple’s services business will hit 20% next year, which will be boosted by its new Apple TV+ streaming service.

“With an attractive price point at $4.99/month, and wide initial distribution to the Apple installed base via the bundled free year offer, we estimate Apple TV+ can become a $9B revenue business with 136M paid subscribers by FY25, assuming just 1 in every 10 Apple user pays for the Service by FY25,” Huberty wrote.

Apple however said in September: “We do not expect the introduction of Apple TV+, including the accounting treatment for the service, to have a material impact on our financial results.”

“For Apple TV+ to have a more material impact to our near term estimates, we’d have to assume 1) Apple TV+ production costs are significantly higher at the launch of the Service, and/or 2) more users redeem the Apple 12 month free offer with the purchase of a device,” Huberty wrote.

“With a growing list of catalysts, including accelerating Services growth and multiple expansion ahead of the 5G iPhone launch, and an attractive 8% total dividend + buyback yield, we continue to view Apple as our top pick into 2020,” Huberty added.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.