Morgan Stanley hikes Apple stock target price to $200 on 'Apple Car' and AR

Posted:
in AAPL Investors edited December 2021
Investment bank Morgan Stanley has raised its Apple price target to $200, driven by what is expected from the company relatively soon, as well as short-term drivers like the App Store and iPhone supply.

Credit: Laurenz Heymann/Unsplash
Credit: Laurenz Heymann/Unsplash


In a note to investors seen by AppleInsider, lead analyst Katy Huberty said that the bank is cautious on IT hardware heading into 2022 but noted that Apple should benefit from "a light to quality," driven by new products being priced-in, as well as the iPhone and App StoreApple Car," given the longer launch time horizon.

AR/VR opportunities

Huberty says that Morgan Stanley is excited about Apple's future growth prospects mostly because of the AR/VR opportunity.

She points out that Apple has been developing AR/VR technology for years, and that the company's patent quality ranks among the top among technology vendors. Apple also brings a wide network of distribution points, in-house chipmaking, and other advantages to the market.

She notes that her base case appears conservative compared to past new product launches, especially with the potential for Apple's AR or VR solution to further monetize the company's Services.

iPhone and App Store

In addition to new product launches, Huberty says that there are near-term signs that bode well for Apple.

For one, iPhone production appears "surprising" since the company doesn't appear to be experiencing the same level of manufacturing disruptions as it did in the September quarter.

She increases her December quarter iPhone shipments estimates by 3 million units for a total of 83 million units, which would mark a 4% year-over-year increase. Higher iPhone shipment increases drive the bank's 2022 earnings-per-share to $5.78.

App Store net revenue also grew 14% year-over-year in November, according to Sensor Tower estimates. Huberty believes that the App Store will likely outperform year-over-year declines in December and meet her quarterly forecasts.

Because of the new products and other factors, Huberty has raised her 12-month Apple price target to $200, up from $164. The new target is based on a 5.7x enterprise value-to-sales (EV/Sales) multiple on Apple's product business and a 10.9x EV/Sales on Services. It's also based on $301 billion of enterprise value placed on Apple's future products, driven by $22 billion of revenue and a 15x EV/Sales multiple. This implies a 32.8x target price-to-earnings (P/E) multiple.

Read on AppleInsider

Comments

  • Reply 1 of 5
    lkrupplkrupp Posts: 9,713member
    Apple approaching the $3T market cap as of today, currently at $2.78T. When MSFT very temporarily “dethroned” Apple some weeks ago there were headlines trumpeting the news. Now? Nothing.

    Apple supports hundreds of thousands of jobs around the world in manufacturing, retail sales, supply chain transport, etc. Has Apple become ‘too big to fail’ for the economies of the world? It would certainly make ‘a dent in the universe’ if those jobs disappeared. 

    Yet the critics keep yammering about ‘peak iPhone’ and Apple ‘killers, apparently waiting for the decline to happen. But the predictions of doom have been around since 1976 and show no signs of authenticity to this day. Just a few days ago Bloomberg started yammering about slowing iPhone 13 sales and Apple telling the supply chain to reduce production. But then, it was Bloomberg so...
    edited December 2021 leavingthebiggbshank
  • Reply 2 of 5
    red oakred oak Posts: 919member
    IMO, Apple is going to easily get well past $200 with zero new product category launches.   There is tremendous growth and opportunity in the product line-up it already has.  

    This company has been incredibly under-valued for the past decade 
    lkruppbshank
  • Reply 3 of 5
    I’m assuming this is a 12 month target. I do wonder what longer term targets by these analysts “predict”.
  • Reply 4 of 5
    tundraboytundraboy Posts: 1,796member
    lkrupp said:
    Apple approaching the $3T market cap as of today, currently at $2.78T. When MSFT very temporarily “dethroned” Apple some weeks ago there were headlines trumpeting the news. Now? Nothing.

    Apple supports hundreds of thousands of jobs around the world in manufacturing, retail sales, supply chain transport, etc. Has Apple become ‘too big to fail’ for the economies of the world? It would certainly make ‘a dent in the universe’ if those jobs disappeared. 

    Yet the critics keep yammering about ‘peak iPhone’ and Apple ‘killers, apparently waiting for the decline to happen. But the predictions of doom have been around since 1976 and show no signs of authenticity to this day. Just a few days ago Bloomberg started yammering about slowing iPhone 13 sales and Apple telling the supply chain to reduce production. But then, it was Bloomberg so...
    Funny these people who say that the smartphone replacement is on its way.  My reply to that consists of questions like:  How do you take a selfie using a (name your candidate smartphone successor here)?  How do you ask a friendly stranger to take your family picture on your (name your candidate ... ) while you're on vacation?  How do you zoom in on a map on your (name your...), by talking to it?  By gesturing on air like an idiot?

    The problem with some of these pundit futurists is they still think of the smartphone as a phone.  It is not. It's a mobile, compact, computer that can make phone calls.  We may get AR glasses, all sorts of wearable thingies, even anatomically embedded devices but the flat rectangular brick with a screen will remain the hub of mobile computing simply because given our anatomy and cognitive style/abilities, it is still the most convenient and efficient way to do mobile computing.

    Smartphones are like the codex and the pen.  Technologies that have lasted thousands of years because they got certain jobs done better than any other proposed replacement.
    edited December 2021 leavingthebiggmuthuk_vanalingam
  • Reply 5 of 5
    wood1208wood1208 Posts: 2,609member
    Apple valuation is way reasonable than many so called 30 years in future growth valued companies. $3 trillion is another pass through marker.
    edited December 2021
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