Apple recently held its highly anticipated iPhone 15 unveiling event, but it seems that investors were not overly impressed. Despite launching the latest iteration of its flagship product and introducing various updates, Apple stock now sits 11% below its all-time high in July.
While some attendees left the event disappointed, Morgan Stanley analyst Erik Woodring believes that the event met expectations. Woodring noted that Apple’s ability to raise the average selling prices (ASPs) of iPhones, despite not changing the like-for-like pricing, is the most significant takeaway. This strategy helps offset the risk of declining iPhone shipments in China, which is a concern that Woodring has incorporated into his model.
Woodring predicts that Apple’s FY24 iPhone revenue will reach $221 billion, representing a 9% year-over-year increase and 9% above the consensus forecast. He also expects total FY24 revenue to come in at $420 billion, up 9% from the previous year and 3% higher than consensus estimates. Furthermore, Woodring’s FY24 earnings per share (EPS) estimate is $6.93, reflecting a 14% year-over-year increase and 5% above consensus estimates.
However, the event appears to have done little to sway Apple bears who see China as a significant risk. Woodring acknowledges the short-term risks facing Apple’s stock, such as the situation in China, the Google Department of Justice trial, and seasonal performance. Nevertheless, he remains positive about Apple’s longer-term prospects and suggests that investors wait for a more significant pullback before buying aggressively.
Woodring has an Overweight (Buy) rating on Apple stock and a price target of $215, implying a 23% upside potential over the next 12 months. The stock has a Moderate Buy consensus rating from analysts, with 21 Buy ratings and 8 Hold ratings. The average price target of $207.39 suggests a potential return of 18.50% in the coming months.
– Morgan Stanley analyst report
– Apple stock forecast by analysts at TipRanks