Skip to main content

Market Overview

Apple's Bear Case Is Off The Table, According To Morgan Stanley

Apple's Bear Case Is Off The Table, According To Morgan Stanley

Apple Inc. (NASDAQ: AAPL) reported better-than-expected June quarter margins. Channel inventory reductions have set the backdrop for improved 2H results, Morgan Stanley’s Katy L. Huberty said in a report. She maintained an Overweight rating on the company, while raising the price target from $120 to $123.

Apple reported its quarterly gross margin at the high-end of its guidance range of 37.5-38.0 percent, despite higher-than-expected channel inventory reductions. The company also announced higher-than-expected guidance for the September quarter. Analyst Katy Huberty commented that the results and guidance have pushed the margin debate “to the back burner.”

The EPS estimate for FY17 has been raised from $8.55 to $8.80.

Related Link: Apple Surprises Street, Posts Top And Bottom Line Beats

Another Super-Cycle In The Offing

“We expect investors to begin positioning for another iPhone supercycle starting in the next several months,” Huberty wrote. Management’s tone on iPhone demand was more positive and the bear case is now “off the table.” Meaningful improvements in battery life and display innovation would likely result in a higher upgrade rate when the new iPhone is launched in September 2017.

“With a growing iPhone installed base and the highest switching rate ever, Apple could see an even bigger supercycle in just over a year compared to iPhone 6 in 2014. What's more, Apple appears more focused on Artificial Intelligence and Augmented Reality applications that can further support improving upgrade rates and possibly switching rates, and sustain Services growth,” the analyst mentioned.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for AAPL

Feb 2021RBC CapitalAssumesOutperform
Jan 2021DA DavidsonMaintainsBuy
Jan 2021Deutsche BankMaintainsBuy

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings


Related Articles (AAPL)

View Comments and Join the Discussion!

Posted-In: Katy L. Huberty Morgan StanleyAnalyst Color Long Ideas Price Target Reiteration Analyst Ratings Trading Ideas Best of Benzinga

Latest Ratings

KRYSHC Wainwright & Co.Maintains103.0
OTRKRBC CapitalDowngrades32.0
EVHCanaccord GenuityMaintains24.0
BMRNCanaccord GenuityMaintains91.0
ONTFCanaccord GenuityInitiates Coverage On65.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at