Technology Apple Inc. (AAPL) Gets a Green Signal from Morgan Stanley: Here's Why

Apple Inc. (AAPL) Gets a Green Signal from Morgan Stanley: Here's Why

Published By Blake Audett at October 15, 2016 07:21 am

Cupertino giant Apple Inc. (NASDAQ:AAPL) may have already gained traction from the Street lately, however, renowned brokerage Morgan Stanley expects an even better future ahead. The brokerage expects the upcoming quarter’s results to be even better, on account of solid demand for its iPhone 7. The latest addition to the iPhone family has been making waves lately, especially after the demise of one of its competing phones, the Galaxy Note 7. Morgan Stanley has raised its PT from $123 to $124 in a recent update. The bull case scenario for the brokerage is $162, which the brokerage is confident about.

The valuations for 2017 remain unchanged, as the tech giant’s stock is expected to continue trading near the current p/e multiple of 13.3. The $631 billion company is projected to ship more of iPhones this quarter, as the brokerage increased its estimates to 44 million units. Moreover, the average selling prices are also expected to remain high for the current quarter.

The gross margins are also expected to remain high at 37%-38%, which may help in increasing the bottom-line numbers. The brokerage also expects Apple to post an EPS of $11 by 2018, which as per the 15x multiple, leads to a price target of $165. We have observed that historically, there has been an uptrend in the financial results towards the end of the year, as a new version of iPhone is launched.

The Street remains optimistic about the company’s future, as Credit Suisse and Sanford C. Bernstein reckon higher PTs. The consensus PT stands at $127. We expect a bull dominated week ahead of us.