Morgan Stanley Breaks Down Apple Into 2 Debates, 5 Risks

One of Morgan Stanley's "Best Ideas" in 2015 is Apple Inc. AAPL, a stock that has already gained 16.4 percent in the first two months of the year. Analysts at Morgan Stanley reframed the conversation on Monday morning into two "key debates" and five risks to its price target of $160 per share.

See Also: Morgan Stanley Says Apple's Valuation 'Doesn't Reflect Platform Multiple,' Suggests Valuation Of $160

Debates:

• 1. Can Apple grow revenue and EPS? Morgan Stanley argued that Apple can grow at single-digit pace, while TV and autos could potentially add to growth over the long term.
• 2. Can Apple accelerate innovation? Morgan Stanley said that Apple Watch will be "an important barometer of the company's innovation capabilities." Meanwhile, the company has made good additions to its management team in "key areas."

Risks:

• 1. Android and Windows competition on smartphones and tablets.
• 2. Longer replacement cycles and lower credit from wireless carriers.
• 3. Regulatory and legal risk with higher profit share in mobile devices.
• 4. Combination of strong U.S. dollar and weak global consumer spending.
• 5. New product categories fail to gain traction.