BUZZ-Goldman adds Apple to conviction "buy" list

Wed Nov 18, 2015 6:23am EST
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** Goldman Sachs adds Apple to its list of top picks in the Americas and sees potential for shares gaining as much as 43 pct from current levels

** Goldman says Apple's current valuations of about 11x earnings suggest investors, on average, view it as a "hardware" and "embodies the scars from prior fallen giants in hardware (Motorola, Nokia, BlackBerry, and HP, to name a few)"

** Apple's business model, however, has more in common with companies that monetize mobile users through content and services such as Facebook or Google, Goldman says

** Slowing iPhone 6s sales have weighed on Apple shares as well as shares of major supply chain companies and a weak March quarter is a common point of concern among analysts

** But Goldman sees weakness on the back of these near-term worries over a Y-o-Y unit decline as a very attractive buying opportunity for Apple shares and get in front of a potential re-rating from 11x to 15x forward earnings

** With overall smartphone sales slowing, particularly in China, Goldman sees the right question looking forward is : what will monetization look like over the next five years?

** Broker estimates that Apple will exit December with an installed base of 500mln iPhone users, which compares to 1.4bln Android users, 1.6bln Facebook users and 294mln Amazon users (RM: