Stocks Of Apple Surge Again After Goldman Recommends Buying, Citing An Upside Potential Of Nearly 30%‍

Stocks of Apple are surging again after Goldman Sachs recommends that you buy, citing an upside potential of nearly 30%.

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Apple Inc's shares surged toward a third consecutive gain on Monday after Goldman Sachs analyst Michael Ng said the company's installed base of users is growing, which leads to repeat purchases, providing investors with an opportunity to profit by nearly 30%.

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The analyst believes that growth in the iPhone maker's installed base, along with increased service revenue and new product innovation, should more than offset the headwinds the company is facing on the product revenue front, including longer product replacement cycles and a slowdown in the growth of personal computers and tablets.

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Ng also pointed out that the market's valuation of the technology giant's stock AAPL, 2.49% makes it "attractive" compared to its history and its peer group in the technology sector with larger capitalizations.

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“Apple’s success in premier hardware design and the subsequent brand loyalty has resulted in a growing installed base of users that provides insight into revenue growth through the reduction of customer churn, lower customer acquisition costs for new product and service launches, and encouraging repeat purchases,” Ng wrote in a note to clients.

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Earlier this month, Ng began covering Apple with a buy rating and a target price of $199 per share, which implies a 29% upside over the current price.

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Stocks of the company rose 2.3% in morning trading, putting them at their highest level in three weeks. The stock is up 6.3% in a three-day winning streak that began on March 1 after it closed at a one-month low on March 1.

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As Ng noted, many of Apple's gross profits over the next five years will be driven by its services business, which should mark a "turning point" in Apple's services investment narrative over the next few years, and for Apple to receive a premium valuation over the next few years.

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In terms of growth in services in the coming years, he believes that the App Store will be one of the largest contributors, followed by subscription services, search-engine distribution rights or traffic acquisition costs (TACs) revenues, One Premier advertising, and AppleCare+ and iCloud+ services.

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During Apple's first fiscal quarter through December 31, the company reported record revenues of $20.77 billion, which amounted to 17.7% of the company's total revenues for the quarter.

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Throughout the past three months, the stock has grown by 8%, while the Nasdaq-100 NDX, 0.49%, a technology-heavy index, has seen a 6.9% gain, and the Dow Jones Industrial Average DJIA, 0.10%, has declined by 0.4%.

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