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Thread: Morgan Stanley: "Now is the time to invest" in Apple

  1. #1
    What's Jailbreak? Akshay Masand's Avatar
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    Default Morgan Stanley: "Now is the time to invest" in Apple

    Investment firm Morgan Stanley, recently pushed for a strong recommendation for Apple Stock. The firm states that now is the right time to invest due to low institutional ownership, resilient iPhone sales and anticipating upcoming product launches. Analyst Katy Huberty believes shares of AAPL have been “de-risked” ahead of upcoming product cycles. According to her, if investors are on the fence about Apple stock, now sit he right time to buy before upcoming growth.

    She specifically said that her recent analysis shows that Apple stock tends to improve after periods of growth in research and development as the company invests in new product categories. She cited R&D investment ahead of the launches of the iPod in 2000 and 2001, before the iPhone in 2005 and 2006 and ahead of the iPad in 2008 and 2009.

    Similar to those periods, Apple has kept its R&D spending growing more than 30% year over year for the period between 2010 and 2013. In Huberty’s view, it’s “likely” that some of Apple’s recent investments were in new product categories. Specifically, Huberty expects that Apple may be about to enter the mobile payments space and could also make its first official foray into the wearable connected electronics market.

    In addition, investors are currently underestimating both Apple’s ability to innovate and launch new products as well as the value of its existing user base, many of which have active iTunes accounts with connected credit cards. Even before Apple launches new products, Huberty also believes that institutional ownership of Apple stock is too low. She already highlighted this trend previously in February when her research found that institutional investors’ stake in Apple was at a new 5-year low.

    The analyst also believes that iPhone demand may have been slightly better than expected in the just-concluded March quarter. A recent survey by Morgan Stanley and AlphaWise suggests to her that Apple may have sold 38 million units in the here-month span and she sees the potential for “modest upside” to that estimate. She sees the potential for Apple to report revenue of $44.5 billion for the March quarter with a gross margin of 38.2% and earnings per share of $10.80.

    Last but not least, Huberty also made note that Apple bought back at least $14 billion of its own stock last quarter. Assuming a share price of $500 around the time that the buyback occurred, the analyst calculates that the buyback could add 19 cents to earnings per share for the March quarter. With a strong recommendation for investors to buy AAPL, Morgan Stanley has maintained its price target of $630 with an “overweight” rating.

    Source: Morgan Stanley via AppleInsider

    Twitter: @AkshayMasand

  2. #2
    My iPhone is a Part of Me buggsy2's Avatar
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    What's Huberty's record as an anal-ist? Anybody can talk.

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