Apple’s record quarter could be even bigger than expected, says Morgan Stanley

Apple starts cutting App Store fees for small developers

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Investors are not optimistic enough about Apple Inc.’s upcoming earnings report, according to a Morgan Stanley analyst. While consensus forecasting models post holiday quarter revenue of $ 102.5 billion for Apple AAPL, + 2.89%, Morgan Stanley’s Katy Huberty takes an even more optimistic view of how the company performed late last year.

She expects the company to post first-quarter tax revenue of $ 108.2 billion driven by strong iPhone 12 sales, and raised its target price on Apple shares to $ 152 from $ 144 before the report. next Wednesday. Huberty also expects record earnings per share of $ 1.50, above the $ 1.41 that analysts surveyed by FactSet project. Shares of Apple rose 2.4% in trading on Thursday morning. Read: Tech stocks won’t crash according to this fund manager, nicknamed Warren Buffett Huberty, who called the iPhone 12 “Apple’s most successful product launch in the last five years,” which he said probably prepared the company for vacation success. quarter and beyond. Consumers appear to be opting for higher-priced iPhone models with larger, more expandable storage configurations, he wrote, a boon for margins. He’s less concerned about the possible weakness of the smaller iPhone 12 and iPhone 12 mini models, saying those devices are more popular in international markets with more price-conscious consumers. Apple also appears poised to continue to benefit from the challenges at China’s Huawei, he argued, as the rate of customers switching from Huawei to Apple is at a 15-month high. Don’t Miss: The vaccine distribution effort gets help from Big Tech. Other product categories could also set up well amid the pandemic. “Sustained work and learning from domestic demand, coupled with a strong holiday season, gives us confidence in our forecast for the December quarter of previous consensus iPad, Mac and handheld devices,” Huberty wrote. Although it is slightly below the consensus forecast with its projections for services, it sees an upside opportunity there, as the App Store appeared to have another solid quarter. Their main concern regarding services is that AppleCare purchases are often tied to in-store purchases, which is less prevalent due to store closings and stay-at-home trends. Shares of Apple have gained 16% in the last three months, as the Dow Jones Industrial Average DJIA, + 0.19% has advanced 11%.