Morgan Stanley bumps Apple price target to $210 on record-breaking Q1 2022

Investment bank Morgan Stanley has raised its Apple price target to $210 after the iPhone maker reported Q1 2022 earnings that broke records and beat Wall Street's predictions.

In a note to investors seen by AppleInsider, Morgan Stanley analyst Katy Huberty writes that Apple's December quarter "was one of the cleanest quarters in recent memory" with beats across revenue, gross margins, and earnings-per-share.

According to Huberty, the blockbuster earnings results will likely "refocus investors" on the stability and longevity of Apple's growing user base. That's in addition to the company's growing pipeline of new products and service, which suggest that Apple has ample room to grow.

"When coupled with a stronger than anticipated March quarter guide despite difficult Y/Y comps and continued (but easing) supply constraints," Huberty writes "[The] results illustrate the strength and stability of Apple's product and services ecosystem, a clear differentiator in a more difficult market environment."

Although Apple did not provide specific revenue guidance, its forecast of strong year-over-year growth could debunk concerns of slowing demand. As a result of Apple's March quarter guidance, Huberty now predicts that the company will see 2022 revenue growth of 8% year-over-year.

Huberty also has greater confidence in structurally higher gross margins. While logistics and component costs could weigh on margins in the near-term, she still predicts that gross margins at a company level are now at 43.1% in 2022, up from 42.1% previously.

The growth in user base can also help remind investors about the value of Apple's ecosystem, including lifetime user value, Huberty added.

After earnings, Huberty has raised her 2022 and 2023 revenue by 4.5% and 4%, respectively. Apple remains a top pick for Morgan Stanley in 2022.

The analyst's new 12-month Apple price target of $210, up from $200, is based on a 6x enterprise value-to-sales multiple (EV/Sales) on Apple's product business and a 10.6x EV/Sales multiple on Services. That implies a 33.2x target price-to earnings multiple.

5 Comments

lkrupp 10521 comments · 19 Years

About 2 years ago

Sounds like Wall Street is now going to set the bar so high Apple will not be able to make it anymore.

waveparticle 1497 comments · 3 Years

lkrupp said:

Sounds like Wall Street is now going to set the bar so high Apple will not be able to make it anymore.

Why not? The dollar has been diluted so much in the last few years. It is not the same dollar twenty years ago.

cg27 221 comments · 18 Years

$250 (unless all hell breaks loose in Ukraine)

All one has to do is look around. AppleWatch, AirPods, iPhones, MacBooks everywhere (here in the US at least). And while I may live in a very affluent area I notice more or less the same wherever I go.

And of course that’s only what’s obvious in the wild.

Services will continue growing nicely.

Rarely see droid phones or watches, even though droid phones dominate worldwide, mostly out of necessity, and same for PCs.

So there’s still plenty of room for Apple to gain a bigger slice of the overall expanding pie.

Long Apple

MacPro 19840 comments · 18 Years

MacPro said:

cg27 said:

$250 (unless all hell breaks loose in Ukraine)

All one has to do is look around. AppleWatch, AirPods, iPhones, MacBooks everywhere (here in the US at least). And while I may live in a very affluent area I notice more or less the same wherever I go.

And of course that’s only what’s obvious in the wild.

Services will continue growing nicely.

Rarely see droid phones or watches, even though droid phones dominate worldwide, mostly out of necessity, and same for PCs.

So there’s still plenty of room for Apple to gain a bigger slice of the overall expanding pie.

Long Apple

I agree. Interestingly, I come across many proud, self-proclaimed Apple users now who see that as meaning they have an iPhone and an iPad, not a Mac. When I ask why still a PC? It's invariably because they 'use' Office. The thing is, I suspect none of them really use Office for much as they are retired, it's just that's all they know. Apple should do more to promote their Office-like software, and the interoperability with iPhone and iPad to attract these types. Of course I am not including gamers here, even I use a PC for games which is a shame, if only triple A games ran in Apple Silicon! But, that's another discussion.

Interesting observation, wonder if they know that Office is available for Mac and also via web / annual subscription? I use Office apps on my Mac all the time with no issue. Most of my colleagues overseas use PC laptops - when we send files back and forth or work live there are no issues. Apple should definitely tout this compatibility.