Apple iPhone Cycle May Be Shrinking, And That's Good For Growth

• Shares of Apple, Inc. AAPL rose 2.26 percent over the past five trading days.
• Morgan Stanley’s Katy L. Huberty has maintained an Overweight rating and price target of $155 on Apple.
• At its event held Wednesday, the company indicated that the iPhone upgrade cycle might be shortening, while providing updates on four product lines.

The company also announced the launch of its new iPhone 6s and 6s Plus. The new models come with the tagline, “the only thing that’s changed is everything.” The company highlighted the 3D Touch and other innovations that have gone into this product cycle.

Apple also announced the launch of a new financing program, starting at $32 per month for the 16GB iPhone 6s. This program will be available at Apple stores across the US. “Users can upgrade to a new unlocked iPhone every year, choose a carrier, and get AppleCare+ (extended warranty),” the Morgan Stanley report stated.

In addition, the new upgrade program for the iPhone is expected to boost shipments and shorten the iPhone’s life. According to Huberty, “If Apple launches the program globally, every 10 percent iPhone user adoption will boost CY17 shipments by 24M units or $0.90 of EPS.”

Apple also discussed the new Apple TV set top box, which offers both an Apple Store and Siri, and allows users to look for content across several providers. The company also ran various game demos, since it is moving into casual gaming.

The company also launched the iPad Pro, with a 12.9 inch display and a stylus that has been named Apple Pencil. “We think the iPad Pro is focused on enterprise or content creation apps,” Huberty added. New Apple Watch models were also introduced at the event, “which provide broader options/value at the lower ASPs.”