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!
Please help support MacDailyNews. Click or tap here to support our independent tech blog. Thank you!
Shop The Apple Store at Amazon.