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Morgan Stanley Hikes AAC Technologies Estimates On Apple Expectations

Morgan Stanley Hikes AAC Technologies Estimates On Apple Expectations

Morgan Stanley raised its estimates on AAC TECHNOLOGIES H USD0.01 (OTC: AACAF) to a $65.00 price target based on Apple Inc. (NASDAQ: AAPL) expectations.

AAC Technologies' shift from single to multiple drivers is being viewed as a "fruit bearer" in 2016, according to Morgan Stanley's research report released on Thursday.

Rerating Warranted, But Concerns Should Be Minimal

"We expect AAC to benefit from dollar content upgrade for most if not all key products, enabling it to outgrow peers in a slowing industry. Visible growth, ROE uptrend and reduced single product risk should warrant re-rating," Morgan Stanley analysts commented in the note.

Related Link: Report: Apple iPhone Upgrade Coming

However, investors shouldn't be too worried.

While Morgan Stanley believes that the Street is "overly concerned" about Apple's iPhone 6 sell-through risk, they are overlooking the upside potential from dollar content increase across almost all major products. As a reference point, iPhone's sell-through improved in November.

Morgan Stanley also noted that AAC's early-mover advantage and self-designed equipment ensures its share for new haptics designs in the next generation iPhone.

Looking Ahead

The outlook for AAC Technologies is looking good. The company experienced an EPS growth of 49.6 percent last year, and its current growth estimate for this year calls for an earnings-per-share growth of 16.6 percent.

Morgan Stanley expects AAC's visible growth to be fueled by rising dollar content next year. The company's dynamic components are poised to deliver 113 percent, 19 percent and 14 percent YoY sales growth in 2016.

Image Credit: Public Domain


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