Shares of Apple hit $100 as Morgan Stanley provides strong endorsement to investors

Posted:
in AAPL Investors edited August 2014
Apple is on the verge of a major new iPhone product cycle, but this one will be unlike any other launch before it, making it an ideal time for investors to buy in to the company's stock, Morgan Stanley said on Tuesday, helping shares to touch $100 in mid-day trading.




Analyst Katy Huberty issued a strong recommendation for shares of AAPL in a new note to investors, a copy of which was provided to AppleInsider. In it she gave a list of reasons why she believes this fall's product cycle refresh will be "different" from years past for investors.

For starters, Huberty believes shares of Apple are set to grow with currently low institutional ownership rates. She noted that the top 100 institutional holders of AAPL shares have a 2.3 percent stake in their portfolios, much lower than the 4.5 percent share the company held at its peak position in 2012.

Apple's current institutional ownership is also well below the S&P 500's rating of 3.4 percent.




She also believes that the market should pay more attention to the leadership and product investments that Apple has made in recent years, brining on key new personnel and putting huge sums of cash into research and development, along with acquisitions.

Specifically, Apple's spending on manufacturing and parts is at the company's highest level since 2007, prior to the launch of the first-generation iPhone. For the June quarter, Apple's commitments for third-party manufacturing and components grew 22 percent sequentially to $15.4 billion.




Huberty also expects the "iPhone 6" launch window to have more favorable margins than the debut of the iPhone 5 carried for Apple in 2012. In particular, she expects that the anticipated "iWatch" will post strong margins, which would stand in contrast to the margin erosion that Apple saw in 2012 with the debut of the first iPad mini.

The analyst also noted that Apple's online services, particularly the App Store, are improving overall margins and represent a greater portion of the company's revenue. And warranty expenses as a percent of revenue are declining year over year -- another trend she predicts will continue.




And Huberty has high hopes for this year's product launches, predicting that the "iWatch" in particular could see up to 60 million shipments in its first year alone. Her "base case" prediction calls for Apple to ship 41 million "iWatch" units, while she also believes that larger form factors for the "iPhone 6" will help drive year over year sales growth.

Though Huberty pushed a strongly for investors to own Apple stock on Tuesday, her price target of $110 remains unchanged from when she initially updated it in mid-July. She has also maintained her "overweight" rating.
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Comments

  • Reply 1 of 62

    At 11.56AM EDT, 8/19/14

    image 

  • Reply 2 of 62
    Manipulation FTW
  • Reply 3 of 62
    iqatedoiqatedo Posts: 1,593member
    Quote:
    Originally Posted by anantksundaram View Post

     

    At 11.56AM, 8/19/14

    image 


    No, no, no... 12:14 a.m. 08/20/2014 :-)

  • Reply 4 of 62

    Next stop, $60.

  • Reply 5 of 62
    rogifanrogifan Posts: 10,669member
    Getting close to $600B market cap. What was the highest Microsoft got to back in the day?
  • Reply 6 of 62
    apple ][apple ][ Posts: 8,360member

    I've been buying more shares these last few weeks and days! Easy money!

     

    Keep it coming!

  • Reply 7 of 62
    apple ][apple ][ Posts: 8,360member

    Wow, the fund ownership looks really low right now.

     

    Imagine how much higher AAPL can go when funds start buying up again.

  • Reply 8 of 62
    apple ][apple ][ Posts: 8,360member

    The funny part is that all of my profits will probably go right back into Apple, because I am definitely going to be snapping up a few new Apple products next month, when they release a whole bunch of goodies.

  • Reply 9 of 62
    Quote:

    Originally Posted by Rogifan View Post



    Getting close to $600B market cap. What was the highest Microsoft got to back in the day?



    "The previous historical record for top market cap belonged to Microsoft, whose market value topped out at $616.3 billion in December 1999"

  • Reply 10 of 62

    Getting close to the Apple all time high, adjusted for the split, at $100.72!

  • Reply 11 of 62
    jungmarkjungmark Posts: 6,632member
    So instead of Apple stock has been negative since it's high, the story will be Apple stock has no change in two years.

    Hey where are the users that said Apple wouldn't hit 700 (100) again?
  • Reply 12 of 62
    Quote:

    Originally Posted by Rogifan View Post



    Getting close to $600B market cap. What was the highest Microsoft got to back in the day?

     

    Bill Gates didn't do drugs.

  • Reply 13 of 62
    apple ][apple ][ Posts: 8,360member
    Quote:

    Originally Posted by Benjamin Frost View Post

     

    Bill Gates didn't do drugs.


     

    He should've. He's much too square.

     

    Windows is atrocious. They definitely need to do drugs and get more creative.

     

    I am glad that Steve Jobs did some drugs every now and then.

  • Reply 14 of 62
    Quote:

    Originally Posted by jungmark View Post



    So instead of Apple stock has been negative since it's high, the story will be Apple stock has no change in two years.



    Hey where are the users that said Apple wouldn't hit 700 (100) again?

     

    Busy covering their shorts; I believe that's the expression.

  • Reply 15 of 62
    Quote:

    Originally Posted by Apple ][ View Post

     
    Quote:
    Originally Posted by Benjamin Frost View Post

     

    Bill Gates didn't do drugs.


     

    He should've. He's much too square.

     

    Windows is atrocious. They definitely need to do drugs and get more creative.

     

    I am glad that Steve Jobs did some drugs every now and then.


     

    That's a criticism that you should be aiming at Blackberry with their new Passport.

  • Reply 16 of 62
    apple ][apple ][ Posts: 8,360member
    Quote:
    Originally Posted by Benjamin Frost View Post

     

    That's a criticism that you should be aiming at Blackberry with their new Passport.


     

    I've written this before on this forum, but I sometimes visit Crackberry when I need to laugh at other people, and those people are just totally delusional.

     

    Some of them actually think that the Passport is going to be a hit. What's going on at Crackberry is delusional people who live in their own reality, a sick reality.

  • Reply 17 of 62
    crowleycrowley Posts: 5,648member

    You know how you say Apple shouldn't bring politics into their business?  Well I don't agree, but you definitely shouldn't bring politics into conversation about Apple.

  • Reply 18 of 62
    Quote:

    Originally Posted by Crowley View Post

     

    You know how you say Apple shouldn't bring politics into their business?  Well I don't agree, but you definitely shouldn't bring politics into conversation about Apple.


     

    Ever the intolerant. 

  • Reply 19 of 62
    crowleycrowley Posts: 5,648member

    Shut up BF.

  • Reply 20 of 62
    MarvinMarvin Posts: 14,195moderator
    Next stop, $60.

    They still have to do a huge buyback before the end of the year, which might push it up if it hasn't already been factored into the current value. That's part of the problem though, nobody knows what information traders have already used to reach the current price. People tend to make assessments based on the current price as though that's an accurate starting point.

    People say oh look it's $100 now but just wait until the buyback and the iPhone 6 as though nobody else knows about those things. What typically happens is there's an adjustment after those events as they've already been anticipated and after they are done, there's nothing after that to justify traders increasing the price.

    The current price is not based on the present or past but is already based on what people expect from Apple in the future.
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