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Apple ( AAPL ) stock rose to a 2016 high Monday after the company got a pair of positive reports from Wall Street analysts. Credit Suisse analyst Kulbinder Garcha said Apple’s services business is “an underappreciated driver” for the company. He reiterated his outperform rating on Apple stock and raised his price target to 150 from 140. Brean Capital analyst Ananda Baruah maintained his buy rating on Apple stock but lowered his price target to 155 from 170. Apple stock was up 1.5% in midday trading in the stock market today , near 112. Garcha estimates that Apple’s services businesses could account for 29% of Apple’s gross profit by 2020, up from 15% today. Apple’s services include its App Store, Apple Pay, Apple Music and iCloud. Apple’s services growth will be driven by its growing installed base of devices, rising services spending per user, and new service opportunities in the TV and video market, Garcha said. A big question remains how Apple will expand in the video services market. It currently offers rentals and purchases of video through its app store, but has no subscription service like Netflix ( NFLX ) or Hulu. Apple has four options in the video services market, Garcha said. First, it could stick with its electronic sell-through model, but that has a small total addressable market. Second, it could become a “virtual MSO” (multiple-system operator) by aggregating broadcast and cable networks. Third, it could invest directly in creating its own original content. Fourth, it could acquire a subscription streaming service, but that seems unlikely, Garcha said. Brean’s Baruah remains bullish on Apple because of its iPhone business. He said early reports of iPhone SE sales point to calendar 2016 shipments at the higher end of his forecast for 20 million to 25 million units. RELATED: Low-Cost iPhone SE Could Dent Apple’s Profit Margins Middle-Aged Apple Might Get A Sports Car, New Girlfriend Scalper1 News
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