Apple: Morgan Turns Bullish, Sets $180 Target

Apple (AAPL) shares are heading higher after Morgan Stanley analyst Kathryn Huberty Tuesday morning upper her rating on the stock to Overweight from Equal Weight, lifting her price target to $180, from $105.

Huberty said the company has better long-term growth potential than the Street generally realizes. “iPhone is feeding earnings growth that the market is missing,” she writes in a research note. “We believe Apple is emerging as the clear leader in the battle over the mobile Internet. We size this as an incremental 4 billion installed base opportunity for Apple, 4x the installed base of PCs and 10x the installed base of MP3 players.”

Huberty says her survey work points to “iPhone-driven EPS upside over the next two years,” muting any margin or growth concerns in the iPod and Mac segments.

The Morgan Stanley analyst says the September 2009 quarter will be a “key inflection point.” She expects a price cut in the current generation iPhone to drive 50%-100% incremental unit demand: a $50 price cut should drive 50% growth, she says, and a $100 cut, a 100% increase. She also says 15%-plus of the current installed base typically upgrades to a new generation phone.

Huberty ups her calendar 2009 unit forecast by 42% to 24.8 million; for calendar 2010 she now sees 36.2 million phones, up 61%.

She lifts her FY September 2009 EPS estimate to $5.48, from $5.23; for FY 2010, she goes to $7.03 from $5.38; for FY 2011, $8.83, from $5.85.

AAPL Tuesday morning is up $2.47, or 2%, to $124.97.

Original post

Comments

[BMWTwisty:]

Huberty has chutzpah. She's the most consistently clueless analist out there. Why would anyone believe a word she spews? Maybe she was trying to not fall too far behind Abramsky's clairvoyance.

May 26 09:56 AM

[discov:]

I think you have to deal with this tinyurl.com/qm6x77 trend line, before we have any hope of hitting 180.

May 26 11:44 AM

[waf76:]

Agree completely. She's finally getting it after all this time covering apple. It's like she finally got a clue.


On May 26 09:56 AM BMWTwisty wrote:

> Huberty has chutzpah. She's the most consistently clueless analist
> out there. Why would anyone believe a word she spews? Maybe she was
> trying to not fall too far behind Abramsky's clairvoyance.

May 26 04:15 PM

[Liverpool:]

“iPhone is feeding earnings growth that the market is missing,” she writes

Actually not the market that is missing, but she meant I'm missing it.. Only her that completely screw-up....

May 26 04:22 PM

[Hayweed:]

@discov - with the huge spike today it appears that Apple broke thru the line which was 130.00

May 26 08:21 PM

[pftittl:]

If AT&T would not be ripping consumers off with the data charges, sales would soar. Alternatively, APPL needs to consider offering the product through other carriers. Look for a big boost in sales come July once the new iPhone comes out with faster chip, more storage, better camera, same price points.

May 27 08:40 AM

[mollytjm:]

um...Apple IS looking to offer through other carriers but has an exclusive with ATT through 2010...after that it will be available elsewhere. Verizon wouldn't allow the company to have enough control over it's product initially (they were the first interviewed), including iTunes and apps and their profit margin wasn't as good so then they went to ATT. Obviously that plan has worked well.

I can't see anything stopping Apple's growth and profit as long as they stay on track with their commitment to great innovation and customer satisfaction. It's a great 'buy and hold' stock.
Long APPL

May 27 10:40 AM