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Is Apple Bank in the Cards? Unlikely Says This Analyst
Stock Analysis & Ideas

Is Apple Bank in the Cards? Unlikely Says This Analyst

Apple (AAPL) is now working on a suite of in-house financial services, giving its fintech endeavors the title of “Project Breakout.” The tech giant is set to offer a range of financial services, which according to Bloomberg, include payment processing, fraud analysis, assessing risk for lending purposes, credit checks and other customer-service capabilities such as the handling of disputes.

“Moving to an internal payment processing system would be a big move for Apple,” says Evercore analyst Amit Daryanani, “but we think it is logical given its strengths and the opportunity to extract significant tolls in the payments ecosystem.”

Apple also recently bought Credit Kudos, a U.K.-based startup which develops software that utilizes banking data in order to make lending decisions. Additionally, since announcing Apple Pay in 2014, financial services have become more prominent in the Apple ecosystem.

All this focus on finance raises the question whether Apple has set its sights on becoming a chartered bank. Daryanani thinks that is unlikely, believing there is a “low probability” Apple will go down that route.

Basically, Daryanani thinks that rather than being consumers’ “bank of choice,” Apple is intent to be “a payment facilitator to enhance the stickiness of the ecosystem.”

Moreover, a company would have to divulge and share “in-depth details” concerning the long-term roadmaps and at the same time would need to comply with stringent regulatory guidelines and capital limitations in order to obtain a banking charter.

“Given how secretive AAPL is around product launches and roadmaps,” notes Daryanani, “this alone would be a huge stumbling block.”

Nevertheless, Daryanani thinks Apple Pay remains an “underappreciated” element of the Apple story, one which by FY26 can account for more than $11.6 billion in revenue. And to achieve such a goal, Apple “doesn’t need to become a traditional bank.”

All in all, Daryanani rates AAPL shares an Outperform (i.e., Buy) and backs that up with a $210 price target. Investors are looking at upside of ~22% from current levels. (To watch Daryanani’s track record, click here)

What does the rest of the Street make of Apple’s prospects? Most are on board. The stock’s Strong Buy consensus rating is based on 23 Buys vs. 5 Holds. Going by the $193.36 average target, shares are set to generate returns of 12.5% over the one-year timeframe. (See Apple stock forecast on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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