Morgan Stanley said Friday it is reducing expectations for Apple through fiscal 2021 to better align with the bank's macro view that GDP growth will take a greater hit than previously expected, due largely to a prolonged consumer recovery.
While the coronavirus is still having a big impact on China iPhone production, and the smartphone market as a whole, Morgan Stanley sees the impacts as mostly timing problems for Apple, and are buyers, maintaining a $368 stock price target.
Morgan Stanley has raised its price target on shares of Apple, voicing its view that investors are under-appreciating the impact this year's 5G-enabled iPhone release is expected to have on the company's bottom line, especially given the roll-out is expected to coincide with a multi-year peak in the number of iPhones due for replacement.
China, the world's largest smartphone market, has been nothing short of a moving target for Apple. A salvo of shots fired by top analysts this week only evidences one thing: the only near-term certainty with Apple and China may be more uncertainty.
Optimism surrounding Apple's upcoming 5G iPhone cycle and revenue growth within the company's Services sector helped drive one of the largest sequential increases in institutional ownership of AAPL shares in more than half a decade.
Morgan Stanley's Katy Huberty suspects that a comprehensive media bundle including Apple's video offering and a rumored News subscription service will continue to drive Services forward, and return the company to a $1 trillion valuation.
Investors should consider buying Apple stock now, less than a week before the iPhone producer announces its quarterly financial results, according to Morgan Stanley, with the shares unlikely to go much lower following its revenue miss warning earlier this month.
Investors are overreacting to changes in the iPhone supply chain and manufacturing reports, Morgan Stanley suggests, with the company's continued Services growth highlighted as the better avenue for revenue increases than its hardware sales.
Katy Huberty from Morgan Stanley has taken a deep-dive into Apple's services market segment, and has taken a close look at the factors that will make Apple's once-overlooked aspect of its business a major factor for investors to consider now, and in the future.
Apple had $26.5 billion in off-balance sheet commitments at the end of the June quarter — a massive year-over-year increase that suggests the company is planning for a record breaking launch of its next-generation "iPhone 6s."
Lofty expectations were beyond the reach of Apple last quarter, sending shares tumbling more than 7 percent. But a number of bullish analysts see the stock pullback as a buying opportunity for investors, who can get in at a cheaper price before the launch of new iPhones.
Demand for Apple's flagship iPhone 6 and iPhone 6 Plus remains extremely strong, even as the product cycle begins to wind down, while consumer interest in the Apple Watch is outperforming the first iPhone, new data reveals.
Countering an analyst report earlier on Wednesday predicting a plateau to Apple Watch demand, investment bank Morgan Stanley says U.S. consumer interest is not just strong, but is increasing, with first-year sales estimated to hit 36 million units.
Apple's growing services business, including the App Store and Apple Pay, could account for 20 percent of its earnings in the next two years, or perhaps even sooner if the company launches its rumored subscription TV service this fall, one analyst believes.