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Morgan Stanley says that the recent decline in Apple’s stock is nothing more than a chance to recover the shares.
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Apple
the stock lagged behind the wider market in recent weeks. One analyst says it offers a good buying opportunity.
Shares of the tech giant have fallen 16 percent since reaching a $ 142.95 close on Jan. 26. In comparison, the Nasdaq Composite fell below 3% and the S&P 500 rose 2% over the same period. Apple shares fell 1.8% in recent Friday’s trading to $ 119.72.
The company hasn’t actually said anything material in recent weeks, but there has been considerable speculation that there could be a reduction in iPhone demand. Nikkei Asia News Service reported earlier this week that Apple recently cut production plans for the first half of the year by 20%, largely due to weak demand for the iPhone 12 mini, the low-end version of the capable iPhone line. 5G announced last fall. Apple did not comment on the Nikkei report and did not respond to one Barron’s request for comment earlier this week.
In a research note on Friday,
Morgan Stanley
hardware analyst Katy Huberty reiterated her overweight rating and $ 164 target price for Apple shares, saying the recent sale is a buying opportunity and that recent discussions about Taiwan’s supply chain developments are more noise than substance.
“In the last two weeks, I have seen reports from [other analysts] that Apple is reducing iPhone production, ”she writes. “These reports have contributed to Apple’s recent performance, and investors are asking us what we hear from the supply chain and how it affects our vision for this year’s iPhone deliveries.”
Huberty’s view is that the reports say nothing about fundamental perspectives. Checks from his Asian colleagues find that construction orders for iPhone 12 models – in addition to the mini – and for older iPhone 11 models are up, not down.
The analyst writes that monthly sales reports from Taiwanese suppliers of company components accelerated in February for the fifth consecutive month. “At a high level, these data points read positively for strong iPhone support,” she said.
She also notes that Apple continues to see strong demand for iPhones in China, with sales exceeding those of domestic smartphone suppliers. She estimates that based on government data on phone sales, Apple’s iPhone sales in China rose 157 percent in January year-on-year and 314 percent in February. Third-party data show that Apple’s share of the installed base for smartphones reached 20.4% last month, up 85 basis points from year to year, marking the sixth consecutive month of increased market share, she adds.
While Huberty acknowledges that there is growing evidence of a slight demand for the iPhone 12 mini, in general, it considers that the consensual estimates for the 2021 tax sales for the iPhone are too low.
“We heard anecdotally from our semiconductor colleagues that Apple’s memory purchases remain robust, which would be contrary to the narrative of significant discounts on the iPhone,” she writes. “Gathering all this, we believe that the news about large reductions in iPhone production is probably more noise in the supply chain than a material concern.”
Write to Eric J. Savitz at [email protected]