Apple is added to the U.S. Focus list at Credit Suisse

Credit Suisse analyst Kulbinder Garcha has raised his price target on outperform-rated Apple from $140 to $150 and the stock has been added to the firm's U.S Focus List.

He says the market under appreciates the growth potential and annuity -type business Apple gets from Services (Internet services, AppleCare, Apple Pay, licensing, etc.) Garcha estimates gross profit from Services has grown from $3.2 billion in 2010 to $14.5 billion (or 15% of total) today. The analyst thinks that, by 2020, it could grow to $33.7 billion — or 29% of total, driven by three factors:

Garcha notes that the installed base of more than 1 billion active devices and nearly 600 million unique users are highly affluent and like to transact (spending 7x more than Android users). As Apple Pay, Apple Music, and iCloud take hold, Services spend per user could nearly double in five years to $113. 3, he adds.