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Morgan Stanley claims that the recent decline in Apple shares is nothing more than an opportunity to recover the shares.
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stocks have lagged behind the broader market in recent weeks. One analyst says it offers a good buying opportunity.
Shares of the tech giant have fallen 16% since reaching a closing high of $ 142.95 on Jan. 26. In comparison, the Nasdaq Composite fell less than 3% and the S&P 500 rose 2% in the same period. Shares of Apple fell 1.8% last Friday to $ 119.72.
The company has said nothing material in recent weeks, but there has been considerable speculation that iPhone demand may have softened. The Nikkei Asia news service reported earlier this week that Apple recently cut its production plans for the first half of the year by 20%, mainly due to weak iPhone demand. 12 mini, the low-end version of the 5G-compatible iPhone line announced last fall. Apple has not commented on the Nikkei report and has not responded to any De Barron comment request earlier this week.
In a research note Friday,
Morgan Stanley
Hardware analyst Katy Huberty reiterated her score on overweight and the $ 164 target price of Apple shares, saying the recent sale is a buying opportunity and that recent talks about the evolution of the chain Taiwan’s supply are more noise than substance.
“Over the past two weeks, we have seen reports from [other analysts] that Apple is in the process of reducing iPhone production, ”he writes. “These reports have contributed to Apple’s low performance and investors are asking us how we feel about the supply chain and how it affects our view on iPhone shipments this year.”
Huberty’s view is that the reports say nothing about the key perspectives. According to the checks of his Asian colleagues, it is clear that construction orders for iPhone 12 models – apart from the mini – and for older iPhone 11 models are rising, not falling.
The analyst writes that the monthly sales reports of the company’s Taiwanese component suppliers accelerated in February for the fifth consecutive month. “At a high level, these data points are positive for strong sustained iPhone demand,” he says.
He also notes that Apple continues to see strong demand for iPhones in China, with sales higher than those of domestic smartphone suppliers. According to government data on phone sales, Apple’s iPhone sales in China increased 157% year-on-year in January and 314% in February. Third-party data shows that Apple’s share of the installed base for smartphones reached 20.4% last month, an increase of 85 basis points year on year, marking the sixth consecutive month of market share increase, he adds.
While Huberty admits that there is growing evidence of soft demand for the iPhone 12 mini, he generally still believes that consensus estimates for fiscal 2021 iPhone sales are too low.
“We’ve anecdotally heard from our semiconductor peers that Apple’s memory purchases remain robust, which would go against the narrative of the iPhone’s major cuts,” he writes. “Gathering all of this, we believe the news about the big iPhone production cuts is probably more supply chain noise than a material concern.”
Write to Eric J. Savitz at [email protected]