Apple recently held its eagerly anticipated iPhone 15 unveiling event, but it seems that investors were not as thrilled as they had hoped. Despite launching the latest iteration of its flagship product and introducing various updates, Apple’s stock is currently 11% below its all-time high in July.
While many investors were disappointed with the “Wonderlust” event, Morgan Stanley analyst Erik Woodring believes that it generally met his expectations. One surprise for some was the lack of a price hike for the iPhone Pro, although the Pro Max’s entry price did increase by $100. However, this is not a concern for Woodring.
The most significant takeaway, according to Woodring, is that Apple continues to drive iPhone average selling prices (ASPs) higher, even without changing the like-for-like pricing. This strategy helps offset the expected decrease in iPhone shipments in China. Woodring now predicts FY24 iPhone revenue of $221 billion, a 9% year-over-year increase and 9% higher than the Street’s estimate.
For those who view China as a “re-emerging, paramount risk,” the event did little to change their negative outlook on Apple’s stock. Woodring acknowledges the near-term risks to Apple’s stock but remains optimistic about the long-term outlook. He suggests waiting for a more significant pullback before considering aggressive buying.
Woodring maintains an Overweight (Buy) rating on Apple’s stock and sets a price target of $215, indicating a potential 23% upside over the next year. The stock has a Moderate Buy consensus rating with 21 Buys and 8 Holds.
In conclusion, while the iPhone 15 unveiling event may not have impressed investors as much as expected, Woodring remains positive about Apple’s prospects. He believes that the upside in iPhone sales and services, along with gross margin estimates, will outweigh any potential multiple compression, making Apple outperform its peers.
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