Apple (AAPL) Bulls Line-Up; Morgan Stanley Notes Strong iPhone and Watch Demand
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In addition to bullish comments from Piper Jaffray this morning, Apple (NASDAQ: AAPL) is also benefiting today (+1.7%) from a positive report from Morgan Stanley analyst Katy Huberty.
In a report today, Huberty said their AlphaWise Trackers indicate 53 million June quarter iPhone end demand. "Our AlphaWise iPhone Tracker, which compiles sell-through data using web search analysis, indicates 53M unit end demand for the current quarter," the analyst commented. "This is unchanged from our read a month ago. Emerging markets, especially China, remain the driver of growth late in the product cycle. All else equal, the 3M unit upside to our estimate of 50M would add $1.8B to our revenue estimate of $48.3B and 11 cents to our EPS of $1.82. We believe sell-side consensus estimates recently moved higher, more in-line with our 50M estimate, while buy-side expectations are now in the low-50s on the back of strong supply and demand data points during the quarter."
The analyst said the iPhone demand is consistent with recent conversations with suppliers. The firm's Asia Tech analyst Jasmine Lu estimates iPhone build of 54M for the quarter.
In addition the analyst said Apple Watch demand is stabilizing at a level 20% higher than the 1st-gen iPhone six weeks post launch. "We are launching our AlphaWise Watch Tracker, which indicates interest level (proxy for demand) in the product five and six weeks after launch is about 20% higher than the first-generation iPhone in mid-2007.," the analyst said. "Watch interest in the week of launch was about half that for the first iPhone, but the Watch has seen a much smaller deceleration since the initial spike. Both products had limited distribution at the beginning - iPhone at AT&T and Watch on the Apple online store - but the Watch has seen more supply constraints due to some component issues and we believe likely conservative demand forecasts by Apple. Apple launched the Watch in nine countries in April. In the UK and Germany, interest levels for the Watch post launch showed similar trends as the US, while in France it saw a slightly larger decline post launch. Net, we see the potential for improved distribution in C2H15 and improved Watch 2.0 features in 2016 to help capture demand implied by our recent AlphaWise survey and tracker data."
Meanwhile, the firm said investor expectations for iPhone and Watch growth are low and thereby they reiterated their Overweight rating and price target of $166. The firm has a bull case of $195, which incorporates more iPhone and Watch upside, and Services growth.
For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.
Shares of Apple closed at $127.03 yesterday.
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Piper Jaffray, Morgan Stanley, Katy HubertySign up for StreetInsider Free!
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