Morgan Stanley reaffirms Top Pick on Apple stock, sees catalyst-rich event path

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By Senad Karaahmetovic

Morgan Stanley analysts hiked the price target on Apple (NASDAQ:AAPL) stock and reaffirmed the Top Pick designation as he sees several catalysts that can help shares re-rate higher.

Pent-up iPhone demand, services re-acceleration, underappreciated gross margins upside, and Apple's first new product launch in 8 years are highlighted as near-term catalysts.

“If we look beyond the near-term, we see 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,” analysts said in a client note.

“Combined, we believe the first 4 of these 5 catalysts have the potential to drive a re-rating in Apple shares toward our new sum-of-the-parts driven $180 price target, with the launch of a hardware subscription program key to unlocking our $230 LTV-driven bull case valuation,” they added.

While analysts highlight that they don’t see another large-cap Hardware company with so many important catalysts and upside potential relative to consensus, they also highlighted some near-term headwinds that can hurt the sentiment.

“Weaker consumer electronics spending, a challenging macro backdrop, FX headwinds, iPhone production shortages, and lingering COVID restrictions are headwinds that are likely to result in Apple's first fiscal year of revenue and EPS declines since 2019,” analysts added.

Apple shares trade nearly 1% higher in pre-market Friday. The stock is up 12.3% year-to-date.