Goldman Sachs says Apple stock will soar 32% over the next year with the market currently underestimating the stickiness of its product ecosystem

• Goldman Sachs sees 32% upside in Apple because the market is underestimating the brand's ecosystem.
• Apple's current valuation is attractive on a historical basis and against tech competitors, it added.

Goldman Sachs estimated Apple stock has 32% upside thanks to the iPhone maker's services, brand loyalty, and sticky ecosystem.

In a Sunday note to clients, Goldman strategists led by Michael Ng said the market's focus on slower product revenue growth makes it underestimate Apple's vast array of products and strong customer base, which encourages repeat buyers and long-term revenue growth.

"Apple's installed base growth, secular growth in services, and new product innovation should more than offset cyclical headwinds to product revenue, such as a reduced iPhone unit demand due to a lengthening replacement cycle and reduced consumer demand for the PC & tablet category," Ng said, initiating coverage with a buy rating.

The updated 12-month price target of $199 represents a roughly 32% upside from Friday's closing price.

Apple's valuation today is attractive compared to its own historical levels, as well as in relation to competing large-cap technology companies, in the firm's view. Not only that, but services that customers rely on from Apple are durable and necessary in the long run even as iPhone demand fluctuates.

Apple's long track record of designing "category-defining" products like the iPhone, and Apple Watch, as well as its emphasis on digital privacy and delivering premium experiences, will keep its brand and stock strong, Goldman added.

"The durability of Apple's installed base, and the resulting revenue growth visibility from attaching more Services and Products is what underpins the recurring revenue - or Apple-as-a-Service-opportunity," Ng said.

Goldman follows another bullish call on Apple stock. In a Friday note, Morgan Stanley analyst Erik Woodring bumped his price target to $180 from $175, and highlighted five under-the-radar catalysts that could send Apple stock to its bull-case scenario of $230.

"If we look beyond the near-term, we see a catalyst-rich event path over the next 12 months that is underappreciated by investors," Woodring wrote, listing pent-up iPhone demand, services growth, margins, new products, and a potential hardware subscription.