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15/07/24
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Apple Stock Gains After Morgan Stanley Upgraded It to Top Pick
On Monday, Apple stock inched up 2% in premarket trading after Morgan Stanley analysts named it a Top Pick and increased the price target to $273 from $216.
The move came after analysts are now convinced that the introduction of Apple Intelligence, and its backward compatibility, can lead to a multi-year refresh cycle for Apple devices.
After analysis of Apple’s upgrade rates, upgradeable iPhone base, model mix, and new user growth, analysts believe Apple will be shipping nearly 500M iPhones over the next two years—235M in the fiscal year 2025 and 262M in FY26.
According to Morgan Stanley’s analysis, this would be 6% higher than the FY21-FY22 cycle, with an annual growth of 5% in iPhone’s average selling price, leading to $8.70 in earnings and nearly $485B in total revenue by FY26, compared to $8.20 and $459B previously, which is between 7% and 9% higher than consensus.
Analysts believe Apple’s recent outperformance was sustainable due to 3 key near-term catalysts in earnings for fiscal Q3– the iPhone launch in mid-September, mid-October’s potential positive revisions in iPhone builds, and the historical trend of Apple stock outperformance being driven by accelerating unit growth.
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