Apple below $132: JP Morgan maintains $200 target on strong services | Philip Elmer-DeWitt

Apple Music is “still buzzing”, Apple Games is “on the run” — Analyst Samik Chatterjee.

From a couple of JP Morgan client notes that landed on my desk on Monday:

The global music industry continues to report solid growth, following a turnaround that began in 2015 and was sparked by rising popularity and a ramp-up in streaming services. Growth in the music industry has been supported by increased content choices for customers, led by a broadening of the competitive landscape over the years led by new entrants. We estimate the addressable revenue opportunity for steam revenue to be around $55 billion in 2025, led by a subscriber count of around ~900 million subscribers. Interestingly, while most streaming music companies continue to grow, the impact of a broader competitive landscape is beginning to temper the growth of larger, established companies, including Apple Music, in recent years at the expense of entrants. most recent. We estimate that Apple Music will continue to maintain its position as the second largest player in the streaming market, albeit with moderate growth, even if installed base penetration expands slightly over time.

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The global gaming market is expected to reach $360 billion by 2028, with mobile gaming continuing to expand beyond the 50% or more of the market mix it already represents. Apple Arcade is an affordable and competitive offering and is well positioned to take advantage of strong growth in the mobile gaming market, in our view, with service differentiation stemming from: 1) the subscription-based service is more rigid; 2) collection of exclusive game content instead of aggregation of already published titles; and 3) the simplicity of the games that enables leverage across demographics as part of the 1 billion+ iPhone installed base rather than a smaller addressable player market. We forecast that Apple Arcade subscribers will expand rapidly, led by the rise in popular titles, generating an estimated 70 million subscribers by 2025, which we estimate will generate $1.2 billion in revenue from the service.

Maintains Overweight rating and $200 price target.

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My take: Chatterjee, for her part, isn’t ready to throw in the towel.

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