Content, third-party integrations are key to Apple Fitness+ adoption, JP Morgan says

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Investment bank JP Morgan expects Apple Fitness+ to bolster the value of the Apple One bundle, but notes that standalone adoption could take some time to ramp up.

In a note to investors seen by AppleInsider, lead analyst Samik Chatterjee wrote that Apple Fitness+ has piqued interest in the same way that Apple TV+ did when it launched in 2019.

Chatterjee notes that early adoption of Apple video streaming service was bolstered by a one-year free trial with new Apple devices as it got off the ground. With Fitness+, the analyst expects inclusion in Apple One to help drive user engagement.

"We believe the early engagement for Fitness+ app will be driven by users accessing it through subscription to the Apple One Premier plan - which we expect to be the primary portion of all Apple One subscriptions," Chatterjee wrote.

Although consumers will likely compare the service to Peloton's digital memberships, Chatterjee cautions that the breadth of content on Fitness+ will likely time some time to ramp up. That will be key to Fitness+ adoption.

The service also features strong synergy with the Apple Watch, but Chatterjee notes that partnerships or integration with third-parth fitness equipment could be a "wild card" for user engagement. Compared to competing services, third-party integration could be a way to provide "superior, but inexpensive" fitness experiences.

Chatterjee compares the Fitness+ potential for partnerships to the fact that Apple CarPlay has been widely adopted by carmakers, driving user adoption.

"While Fitness+ enhances the value of the Apple One Premier bundle, it is unlikely that we would see it contribute materially on a stand-alone basis until potential integration of the platform with third-party fitness hardware, which in combination with increased depth in content, could drive an inflection in stand-alone subscriptions," the analyst concludes.

Taking a broader look at services, Chatterjee expects Apple One to drive 200 to 300 basis points of upside to Services by 2023.

Since Apple One leverages the current success of Apple Music, Chatterjee sees current Music family subscribers to see "strong value" in the Premier subscription. That, he contends, could drive adoptions in the millions.

Although standalone adoption for Fitness+ will likely remain much lower, the service will likely add further value to Apple One, Chatterjee wrote.

Chatterjee is maintaining his 12-month AAPL price target of $150, based on a Dec. 2022 earnings-per-share estimate of $4.96 and a blended price-to-earnings multiple of about 30x.

Shares of AAPL were trading at $109.59 on Friday morning, down 0.68& in intra-day trading.