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Remember When Apple Crashed In 2012? This Isn't A Repeat, Morgan Stanley Says

Remember When Apple Crashed In 2012? This Isn't A Repeat, Morgan Stanley Says
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In a report published Thursday, Morgan Stanley analyst Katy L. Huberty maintained an Overweight rating on Apple Inc. (NASDAQ: AAPL), with a price target of $155.

Apple's shares have declined by more than 12 percent since the company declared its quarterly results, mainly owing to fears of a decline in iPhone unit sales in FY16. "We are buyers ahead on weakness ahead of iPhone unit and gross margin expansion in FY16," analyst Katy Huberty said.

Huberty expects iPhone units to grow by 3 percent next year, supported by continued upgrades of the installed base with slowing new user additions and an expected price cut in September.

Related Link: FBR 'Sees The Forest Through The Trees' On Apple

Although Apple is not fully immune to the current weakness in the China market, it is able to convert "previously mid-market smart phone purchasers to their platform," Huberty wrote.

In the report Morgan Stanley noted, "A combination of services/Watch growth, expanding iPhone margins, and share repurchases deliver 13% base case EPS growth in FY16."

Huberty believes that Apple's shares may appreciate in the back half of this year, as iPhone fears prove to be overblown. Since Apple was building iPhone component inventory, "supply chain data points are likely to be volatile as builds and shipments converge over time," which could add pressure on the company's shares in the near term, the report stated.

Apple's improving gross margins, the start of the new iPhone cycle, low institutional ownership, competitive product line-up and a more robust product services roadmap indicate that the current setup is not similar to 2013, Huberty pointed out.

Latest Ratings for AAPL

Oct 2016Goldman SachsMaintainsBuy
Oct 2016Credit SuisseMaintainsOutperform
Oct 2016PiperJaffrayMaintainsOverweight

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings

Posted-In: Morgan StanleyAnalyst Color Reiteration Analyst Ratings Best of Benzinga


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