Morgan Stanley analyst Erik Woodring believes that Wall Street is overlooking numerous compelling parts of Apple’s story — what else is new? — that could play out “beyond the near-term.”
He cheered “a catalyst-rich event path over the next 12 months that is underappreciated by investors, including reaccelerating iPhone and Services growth, record gross margins, two new product launches, and the potential introduction of an iPhone subscription program.”
These “5 underappreciated catalysts” could drive a “re-rating” of Apple’s stock, in his view, meaning that they could prompt investors to assign a higher multiple to the name. Apple remains Woodring’s top pick, and he boosted his price target to $180 from $175 in a Friday note to clients.
Patrick Seitz for Investor’s Business Daily:
Among the catalysts, Woodring sees Apple’s profit margins improving as foreign-exchange challenges ease.
“Perhaps what is most underappreciated by investors today is just how strong Apple’s underlying gross margins are when adjusting for FX headwinds, which we estimate were 46% in the December quarter and are likely to reach nearly 47% in the March quarter,” he said.
In addition to the iPhone 15, Apple has another major product launch pending with its rumored mixed-reality headset. The new wearable device is likely to combine virtual and augmented reality.
“History shows you want to own Apple stock 6-9 months ahead of key product launches, with Apple’s new AR/VR headset and the iPhone 15 launch both key upcoming catalysts,” Woodring said. The mixed-reality headset would be Apple’s first new hardware platform since the Apple Watch debuted in April 2015.
Woodring believes Apple will announce the headset this summer.
MacDailyNews Take: Even if Apple did nothing else, the company’s imminent iPhone hardware subscription service alone will power growth!
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“MacDailyNews Take: Even if Apple did nothing else, the company’s imminent iPhone hardware subscription service alone will power growth!”
As an Apple product user since the 70s and a Mac user/owner since ’84 and as an Apple stock owner for multiple decades (Hell, I was a formal member of the Evangelistas during the Dark Days.), I will say this unequivocally: If Apple moves to an exclusively subscription service for their hardware and software then I will never buy another Apple product. That includes never buying an iPhone if the only way I can purchase one is through a subscription service.
I choose when I upgrade and pay for that upgrade. I and my family choose when I and my family upgrade (and pay for upgrades) our Macs, iPhones, iPads, etc., not some damn subscription service.
If Apple were to add a subscription capability to purchasing its hardware and software, I’d be fine with that. Just don’t force me to join it, ever.
Won’t happen. It will be optional. What makes you think Apple would want to alienate so many customers by making it compulsory.
He just wants to grandstand and chest-thump.
2X.
AAPL becoming an insurance company is very far from; round peg–square hole.
Apple has been in the insurance business for decades.
What do you think AppleCare is?
Apple introduces their new version of iphone every year, but I do not see any upgraded features in the new version.