"Recent announcements on services has Apple putting money where its mouth is but returns could take some time to extract," analyst Erwan Rambourg said in a note to clients Wednesday. "While the new offerings may garner consumer attention, we do not expect these services to move the needle significantly. We believe Apple has come too late to the game and its offering, by and large do not differ much or are below par to offerings from competition."
The analyst also noted that the services business is likely to be less successful at gaining and keeping customers in emerging markets than it is in the U.S.
Apple shares are up 26% so far in 2019.
"Cash generation and a probable beat next quarter after a China-related warning early in the year will have some investors think the current valuation of Apple is reasonable," Rambourg said. "We believe that following a 41% rise from January 2019 lows and relative optimism / complacency on the services announcement as well as sell-side ratings, there is now some downside."
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