By
Godfrey Benjamin
March 22nd, 2024
Morgan Stanley analyst Katy Huberty is quite optimistic about Apple’s growth as well as its projected foray into new products involving AR/VR headsets and autonomous vehicles.
The US stock indices rallied for the second consecutive day on Tuesday amid renewed optimism on Wall Street. The tech-heavy Nasdaq Composite was up 3% and leading the rally was tech giant Apple Inc (NASDAQ: AAPL). The fresh optimism came as Morgan Stanley upgraded the price target for Apple from $164 to $200. Thus, the banking giant maintained an equivalent of a buy rating on the AAPL stock. On Tuesday, the Apple stick gained a solid 3.5% hitting its new all-time high of $171.
Apart from increasing the stock target, Morgan Stanley’s Katy Huberty also increased her December quarter iPhone shipment forecast by 3 million units to 83 million units. This is a massive 4% increase year-over-year. The analyst also believes that Apple is much better off from the supply constraints it faced in the September quarter. Besides, Huberty also believes that the App Store revenue shall outperform its initial forecasts.
Note that the recent price target of $200 by Huberty doesn’t consider the company’s foray into new products like an augmented reality headset or self-driving car.
Foray into New Apple Products and Services Noted by Morgan Stanley
In the recent note to clients, Huberty argues that Apple’s stock has gained 500% in the last five years. This has been largely driven by the company’s new products and services, and not from iPhone revenue which has grown 40% over the same period.
At the same time, Apple’s services business has grown to $70 billion annually. Similarly, its wearables and accessories business is contributing $38 billion annually. Besides, a healthy 6% of Apple’s revenues come from new products like Apple Watch, AirPods, etc. which didn’t exist five years back.
Huberty is betting on Apple’s upcoming products like the AR headset and believes that it could contribute to as much revenue as the iPad did in its first four years. She wrote:
“Today, we know that Apple is working on products to address two significantly large markets – AR/VR and Autonomous Vehicles – and as we get closer to these products becoming a reality, we believe valuation would need to reflect the optionality of these future opportunities”.
Furthermore, there are strong rumors that Apple is planning to increase iPhone production by 30% in the first half of 2022. On Tuesday morning, shares of Apple suppliers like Micron and Qualcomm.