Tech

Why Apple is still a strong buy: Analyst

The Apple logo at an Apple store in Grand Central Station, New York City
Carlo Allegri | Reuters

Despite global macroeconomic conditions, Apple's stock has more room for upside, Needham & Co. analyst Laura Martin said Wednesday.

"We think if you took Apple's moniker off it and you laid it against the Walt Disney Co., Apple's had higher margins for the last five years. It's had higher earnings-per-asset employed than Facebook for the last five years," she told CNBC's "Fast Money Halftime Report."

Martin, who has a $150 price target on the company, said if you took the hardware label off Apple products, the overall value of the tech giant would be considerably higher. She also cited the expansion of a global mobile footprint as a major component of Apple's potential growth.

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"I think the big call here is that the consumer is replacing his wires in the ground with a global mobile footprint, and Apple has a dominant position in the wealthiest aspect of that," said Martin. "Apple has 16 percent of the global smartphone market."

Though Android's price of hardware is about $300, Apple's average price is about $700 of which $300 is the hardware and $400 is the subscription revenue stream consumers buy into, she added.

"What we found with our survey data is it's an eight-year average hold of a smartphone ecosystem, meaning if you're in Apple, you stay there eight years. That feels like a subscription business to me just like the cable companies."

Needham & Company initiates Apple with a strong buy
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Needham & Company initiates Apple with a strong buy

The Apple ecosystem is extensive, Martin said. It now includes more high-tech apps, better service in stores and even increased security in Apple products. The company also has other offerings that Martin feels are key drivers of Apple's future revenue stream.

"I really like the Apple Pay business, and I really like this focus on cars and other services that increase the annuity stream business of Apple and increase the revenue of their billion active devices today."

Disclosure: Needham & Co. is a market maker for Apple.