Morgan Stanley reiterates Apple ‘buy’ – says market is underestimating iPhone demand

“Morgan Stanley analyst Kathryn Huberty reiterated her buy rating on Apple Inc. shares (AAPL) saying she believed the market is underestimating the likely success of the iPhone,” Tomi Kilgore reports for MarketWatch.

“She raised her 2007 iPhone sales forecast by 33% to 8 million units from 6 million, following a survey of 2,500 U.S. consumers. Huberty also believes Apple’s ability to leverage strong iPhone demand is being underestimated,” Kilgore reports.

Full article here.

MacDailyNews Note: Morgan Stanley has a $110 price target on Apple shares. Morgan Stanley’s survey of 2,500 US consumers found that more people are interested in buying an iPhone than the combined number of people who already own or are planning to buy a similar high-end device in the near term (23% vs. 19%).

[Thanks to MacDailyNews Reader “J Alex” for the heads up.]

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  1. Does anyone know if the iPod works with Vista yet? I know it had problems when Vista first came out and I know vista fried iPods, but I haven’t seen a fix yet from Apple. Does anyone know if it is fixed yet? (not that I would buy vista, I’m only thinking of friends and family)

  2. I hate to be the barer of bad news, but I don’t think Apple can possibly sell what they are suggesting. I think there will be huge demand at first, and it will climb. I think the iPhone will do very well. But do we really think that Apple can sell 10,000,000 iPhones in 2007? That is a huge number. That would be one out of every 6 people on Cingular updating their contract and buying the highest priced phone before they even see one on the street. That seems hard for me to believe. I think demand will more likely mirror the iPod. Slow at first, then take off with awareness.

  3. “That seems hard for me to believe. I think demand will more likely mirror the iPod. Slow at first, then take off with awareness.”

    There’s a lot of buzz surrounding the iPhone and I suspect there’s more “awareness” of the product than you are giving Apple credit for. For one thing, the iPod is already a woldwide phenominon, a success story that iPhone can capitalize upon. Something the iPod did not have going for it at the time it started.

    Also, the iPhone is a highly refined product based upon years of manufacturing iPods. Apple has a lot of experience in this field now that they didn’t necessarily have before.

    I think the sales of this thing will blow the lid off any expectations, and drive Apple’s stock through the roof (based on the fact the stock has not factored in heavy demand for the iPhone).

    Just my 2c.

    We’ll see.

  4. I’ve gotta say, that this is where analysts can properly move the market. There’s no public information out there about this issue, so the market could truly be lagging behind — unlike existing devices where the channels/sales people/suppliers provide real information.

    If I were the brokerages, I would go long on Apple, pump up the iPhone hype, and then go short when the first numbers start rolling out and start bagging on those numbers. Even with adequate iPhone sales, the noise from the analysts would make it appear that it was a failure.

  5. I would love to be wrong on this since I own a good bit of Apple stock but the predictions are assuming that other phone manufactures will sit on their hands and let Apple take that 1% it claims it can take.

    10 million sold would be great but there are very big and experienced phone makers out there that have been given a 5 month lead.

  6. @ zerO

    I would agree with you, if I thought any of the other handset makers could build anything like an iPhone in 5 months. They can’t. I doubt if they could do it in 2 years. The thing is, they’re stuck – stuck with their own little crappy OSes, or worse yet, Microsofts dreadful one. Anybody can make a touch-screen phone, but one that runs on a UNIX variant..? With the graphical capabilities that Apple can create? They’re not even close.
    I saw a commercial for the Product(RED) RAZR last night, and they want like 60 bucks for it. That’s how desperate they’re getting. Does Moto have a super-sweet phone on deck? I’m sure they *did*, but even they must realize that whatever it is looks like an antique next to the iPhone. Do you think they can drop everything and redesign a phone to answer Apple in the next 5 months? No friggin’ way. Not a company that size, with that little design talent.

  7. @ off topic –

    Apple has stated that operability with Vista will be completed with the next iTunes release – not “fixed” with a patch. I’m sure it takes a little time to match up iTunes to the slop-bucket of code that is Vista – and make it work on, at least, a majority of the editions, versions, and slapped-together hacks out there.

    Also, don’t take this wrong, but if you really care about friends and family, you won’t let them drive drunk or use Windows.

  8. “Mac sales surge over 100 percent in January, says Pacific Crest Securities”

    So much for the naysayers re: the new advertising campaign! (I hear that Justin Long now has his own team of paparazzi now!)

    AAPL coming back up from the Tuesday dip. Now at $87+, up $2.50+ from yesterday’s close.

  9. Sounds like good news to me. Who could ask for anything more than underestimation of your potential success? Better than them overblowing it, predicting that 10 million is too little and therefore they believe it to be 15-20m.

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