- Morgan Stanley analyst Erik Woodring reiterates an Overweight rating on Apple Inc AAPL with a price target of $180.
- He expects Apple to post an in-line March quarter but guide down June quarter revenue closer to his $80 billion forecast (vs. consensus at $85 billion), as Street iPhone forecasts in the June quarter look too aggressive relative to the more tepid demand environment globally.
- However, his conversations with clients suggest a guide down is well-known and expected in a Monday note titled “Apple, Inc.: F2Q23 Earnings Preview: The Best House In A Challenged Neighborhood.”
- Therefore if Apple can point to the upside vs. June quarter consensus gross and operating margins, the guide-down might not be a negative catalyst, especially as investors look past the trough of the iPhone 14 cycle to 4 important impending stimuli like the anticipated AR and VR headset launch at WWDC in June, reaccelerating Services growth in the June quarter, easing FX compares that should help to drive gross margins to new record highs each quarter into early CY24, and reaccelerating iPhone shipment and revenue growth in FY24.
- The four catalysts plus the potential launch of a hardware subscription program led to the re-rating, making Apple his Top Pick.
- He will buy any post-earnings weakness if shares underperform after reporting earnings.
- Price Action: AAPL shares traded higher by 0.01% at $165.43 on the last check Monday.
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