Buy the dip in AAPL ahead of 'iPhone 12' launch, says Morgan Stanley

Posted:
in General Discussion edited September 2020
Morgan Stanley sees Apple's recent stock weakness as a "constructive set-up" heading into the "iPhone 12" launch season, since key data points remain strong.

Credit: Andrew O'Hara, AppleInsider
Credit: Andrew O'Hara, AppleInsider

In a note to investors seen by AppleInsider, Morgan Stanley analyst
Katy Huberty notes that AAPL shares are down around 20% since a peak in early September, underperforming the S&P 500 by about 12 points.

But Huberty sees the pullback and cautious hedge fund positioning as a positive for investors, since data points related to the expected "iPhone 12" launch are still strong.

For one, Morgan Stanley supply checks suggest that Apple is increasing its market share in both Europe and China, corroborated by an uptick in iPhone 11 builds in August. And other factors bode well for the launch of new 5G-equipped iPhones, Huberty added.

Apple has reopened 57 total U.S. retail locations in the prior four weeks. On Sept. 23, the company reopened an additional 30 Apple Stores -- the highest one-day reopening since mid-June. In total, Apple has opened 446 out of 512 stores since shuttering all of them due to coronavirus.

"With the iPhone 12 launch approaching, we believe it is critical that Apple has as many retail stores open as safely possible to support what we expect to be strong initial consumer demand for the new iPhone models," Huberty wrote.

The analyst also cites a recent earnings beat from Apple iPhone and iPad casing supplier Jabil. On an earnings call, the supply chain partner reported growth of 17% year-over-year. Jabil CEO Michael Dastoor noted that the iPhone SE drove out-of-season launch, and said that the "upcoming next-generation launch ... is going extremely well."

Long lead times for Mac models are also likely to point to strong demand, rather than a lack of supply, the analyst said.

Average lead times for Apple's Mac lineup was 14 days on Sept. 21, an increase of a single day week-over-week. Although growth consensus suggests a decline in the September quarter, Huberty still believes that Mac growth could accelerate to 29% year-over-year during the period.

Morgan Stanley is maintaining its AAPL price target of $130. Shares of AAPL are currently trading at $108.88 on Friday morning, up 0.61% in intra-day trading

Comments

  • Reply 1 of 9
    eriamjheriamjh Posts: 1,303member
    I've already bought more.  APPL has been very good to me.   Dips are nice, too. 
    llamaBart Ywatto_cobra
  • Reply 2 of 9
    In a note to investors seen by AppleInsider, Morgan Stanley analyst Katy Huberty notes that AAPL shares are down around 20% since a peak in early September, underperforming the S&P 500 by about 12 points”.

    It’s funny how silent the amateur day traders have been on this forum recently.
    chemengin1
  • Reply 3 of 9
    Analyst: "Buy low, sell high!"

    Everyone: /eyeroll 
    muthuk_vanalingamwatto_cobra
  • Reply 4 of 9

    eriamjh said:
    I've already bought more.  APPL has been very good to me.   Dips are nice, too. 
    hope you bought the correct symbol.
    dhawkins541RonnnieOmuthuk_vanalingamindiekidukwatto_cobrachemengin1
  • Reply 5 of 9
    crowleycrowley Posts: 7,630member
    Already did.  Wish I'd waited and got it closer to the current level, but I'm happy that I'll see a good return.
    Bart Ywatto_cobra
  • Reply 6 of 9
    Rayz2016Rayz2016 Posts: 6,699member
    Analyst: "Buy low, sell high!"

    Everyone: /eyeroll 
    And they’re paid for this. 

    And here’s me, unable to get a book deal for “Why the lactose-intolerant shouldn’t drink milk”. 
    watto_cobrafastasleep
  • Reply 7 of 9
    Analyst: "Buy low, sell high!"

    Everyone: /eyeroll 

    I don't know, it works for me.
    I made a 50% gain from the 2008 crash.   And enough to buy a decent new car from the 2020 crash.

    But, perhaps the best advice might be: 
    "The best way to make money in the stock market is not to lose money".   That's because it takes a 100% gain to make up for a 50% loss.

    So, combining both advices, I like to buy low which minimizes my chances of losing money.  For instance, despite the recent sharp drops in American markets, the U.S. funds I bought during the spring 2020 crash still show a 14% gain since their purchase 6 or 7 months ago which, annualized, is over a 25% return.   Logically I should have sold them to lock in their gain -- but with cash nearly worthless as an investment and no stocks worth buying, I'll keep them as portfolio diversifiers till the Fed announces that they are not suppressing interest rates.  And, in the meantime they all generally pay a decent dividend -- far more than what I would make keeping it in cash or money markets.
  • Reply 8 of 9
    Analyst: "Buy low, sell high!"

    Everyone: /eyeroll 

    I don't know, it works for me.
    [blah blah blah]
    Of course it does. That's the joke.
  • Reply 9 of 9
    Analyst: "Buy low, sell high!"

    Everyone: /eyeroll 

    I don't know, it works for me.
    [blah blah blah]
    Of course it does. That's the joke.

    Please explain your joke. 
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