Morgan Stanley Sees Apple (AAPL) Beating December Quarter Views But Says Upside Largely Priced In

January 20, 2022 6:39 AM EST
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Morgan Stanley analyst Katy Huberty reiterated an Overweight rating and a $200.00 per share price target on Apple (NASDAQ: AAPL) ahead of the December quarter earnings report.

Huberty believes the Cupertino-based titan is likely to post upside to Street estimates while the current quarter guide is likely to be in-line with estimates. Both seem to be priced in by the market given the run-up in Apple shares into the CY21 year-end.

Huberty sees improving iPhone production into year end and modest Services outperformance driving solid results for the December quarter. The analyst is 3% ahead of Street forecasts for the total revenue, Service revenue, and Product revenue.

“Shares have underperformed YTD (-9% vs. S&P 500 -6%) after strong December month performance, and we'd be buyers on any further weakness post earnings as we view AAPL as a more defensive/quality outperformer in challenging markets given a 1.65B+ installed base with high loyalty/retention rates, underweight institutional positioning, strong capital returns, and the tendency for Apple to outperform ahead of product cycles (iPhone SE3 in April/May 2022, iPhone 14 in Fall 2022, and a MR Headset in 2023),” the analyst said in a client note.

Recent data from China shows that iPhone shipments grew 26% Y/Y in the December quarter. Overall, Huberty expects a lot of focus to be on “management commentary on the status of the supply chain (including component shortages, manufacturing disruptions, and logistics challenges) will be important in helping investors understand at what point hardware supply and demand will become more balanced.”

Huberty has a $200.00 per share price target on Apple.

By Senad Karaahmetovic | [email protected]

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