On Wednesday, Apple Inc.(NASDAQ:AAPL) stock , ran up 1.4% in premarket trade after it was added to the Goldman Sachs Group Inc. (NYSE:GS) “conviction buy list,” implying that it is undervalued in the market. Analyst Simona Jankowski kept the rate at buy and a 12-month stock price target of $163, which is 43% amobe Tuesday’s closing price of $113.69.
He said that Apple’s stock trades at a price-to-earnings value is 30% below the S&P 500 valuation because Apple is considered a “hardware” company, with a transactional model and limited recurring revenue and visibility.
Over the next year, the focus is expected to shift from unit growth to installed base monetization and recurring revenues. Jankowski also said that the company is already heading towards that direction, with its new iPhone 6s installment plans, along with the upcoming TV service. Goldman Sach’s conviction buy lists include buy-rated stocks with higher potential return. The stock has dropped 2.4% over the past three months.