Morgan Stanley maintains AAPL as a buy, giving four reasons for expecting stock to climb

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Following Bank of America Merrill Lynch yesterday giving six reasons for downgrading AAPL stock, Morgan Stanley has responded today with four reasons it continues to rate the stock a Buy, reports Business Insider.

In a note to clients on Thursday, Morgan Stanley’s Katy Huberty maintained an “Overweight” rating and $155 price target on the stock, arguing that the company will not see a similar stock meltdown to what was experienced after a huge run-up in 2012. 

While acknowledging that supply may be catching up with demand, leading to supply chain reports of seemingly weaker sales, Huberty says there are four reasons the stock is likely to climb.

  1. Gross margins are improving, not deteriorating, as the company heads into the next iPhone cycle.
  2. There’s low institutional ownership of the stock. 
  3. Apple has a more competitive product line-up and a “stickier” ecosystem against Android.
  4. There’s a more robust product and services roadmap.

Addressing concerns about the impact the weak Chinese economy may have on Apple, Huberty says that smartphones costing more than $300 each have been increasing their market share, meaning that Apple is well placed to continue to grow its business in the country.

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Comments

  1. 89p13 - 8 years ago

    Apple has a more competitive product line-up and a “stickier” ecosystem against Android.
    There’s a more robust product and services roadmap.

    And that’s why I’ll maintain (and possibly, increase) my position on Apple.

  2. Weak Chinese economy. Hahahaha. Anyone around long enough knows that most analysts don’t know their ass from their elbow. Anyone can become an analyst in a maximum of 6 months. Most people within a few weeks can amass equal or more knowledge of the markets than most analysts working today possess, including oft-published ones. This is not an exaggeration.

    When one company is bullish and another bearish on Apple’s outlook, it should be obvious that they can’t both be right. I’m not certain if these guys flip a coin or have a random number generator on their feature-phones do the work, but that’s the gist – it’s all made up.

    Even though Morgan Stanley has the right idea in their outlook on Apple, their 4 reasons are largely a joke. I mean, they’re honest to goodness important factors, but they don’t drive the price of Apple stock and never have. Therefore, they’re unlikely to drive the price in the future.

    Back to China… Which has far more “rich” and “wealthy” (by anyone’s definition) people than the US. It’s also got more poor people, but that doesn’t make a difference when you’re trying to sell high-end products, does it?

    • epicflyingcat - 8 years ago

      “Back to China… Which has far more “rich” and “wealthy” (by anyone’s definition) people than the US. It’s also got more poor people, but that doesn’t make a difference when you’re trying to sell high-end products, does it?”

      What a stupid point. Apple isn’t an exclusively luxury brand, it sells most of its products and makes most of its money off the middle class. If Apple wants to sell more products in China, it needs its middle class to get wealthier and larger. Its happening, but not as quickly if growth continues to slow.

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Avatar for Ben Lovejoy Ben Lovejoy

Ben Lovejoy is a British technology writer and EU Editor for 9to5Mac. He’s known for his op-eds and diary pieces, exploring his experience of Apple products over time, for a more rounded review. He also writes fiction, with two technothriller novels, a couple of SF shorts and a rom-com!


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