Apple's share price could see a 43 percent rise over the next 12 months as investors shift their focus on the amount of iPhones the company is selling to the number of services it is getting users to pay for, Goldman Sachs said in a note on Wednesday.
The U.S. investment bank has put a $163 price target on Apple's stock, up from Tuesday's close price of $113.69 and added it to its "conviction buy list".
Goldman says Apple currently trades like a "hardware stock" at an 11 times price-to-earnings ratio (P/E), but with the company introducing services such as Apple Music, it will become more akin to Google or Facebook.
"Apple's multiple embodies the scars from prior fallen giants in hardware (Motorola, Nokia, BlackBerry, and HP, to name a few). However, we think Apple's business model has less in common with traditional hardware companies, and more in common with companies that monetize mobile users through content and services," Goldman Sachs said in a note.
"In addition, the recurring nature of Apple's relationship with a customer base that consumes content and services exclusively through Apple's hardware has similarities to service providers such as AT&T or Comcast; these similarities are becoming more pronounced with Apple's new installment plan model for the iPhone, and its expected launch of a live TV service."