In the same way that both Microsoft and IBM’s mainframe business have enjoyed sustained high profit margins and loyalty despite the presence competitive alternatives, Apple would also be able to outlast rivals. In addition, the analyst said, he saw Apple as “a high quality, branded consumer company” that attracts users with high a “repurchase intention.”
By 2014, according to Sacconaghi, 45 percent of Apple’s profit will start coming from repeat purchases.
How Could This Affect Apple’s Stock?
Sacconaghi, an Apple bull with an Outperform rating and an $800 price target on the stock, was defending the company as investors begin to question its long-term profitability. Apple’s stock has reacted to the recent pessimism around it and dropped to $505 intraday in the middle of November. It closed down 6.43 percent at $538.79 on Wednesday.
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