- Justin Sullivan/Getty Images
- Apple on January 2 lowered its quarterly revenue guidance, blaming slumping sales on a slowdown in China.
- Shares tanked 10% immediately after the brutal announcement, but have nearly reclaimed their pre-announcement level.
- With analysts holding a low bar for Apple earnings, out next week, the stock is at an “attractive entry point,” Morgan Stanley says.
- Watch Apple trade.
Now is the perfect time to buy Apple shares – Morgan Stanley says – three weeks after the iPhone maker’s shock preannouncement of its holiday-quarter guidance and one week ahead of its first-quarter earnings.
“We believe the recent pullback is an attractive entry point given upcoming Services launches and shares already pricing in extremely cautious iPhone replacement cycle and average-selling-price headwinds,” said Morgan Stanley analyst Katy Huberty in a note distributed Friday.
On January 2, the tech giant lowered its quarterly revenue guidance by more than 7%, blaming slumping sales on a slowdown in China. Shares tanked 10% immediately after the announcement, prompting nearly 30 Wall Street analysts to lower their price targets.
Now with Apple shares near their pre-announcement level and analysts holding a low bar for its earnings, the tech giant is likely to report a “better than feared” revenue outlook for its March quarter, Huberty said. Wall Street is expecting earnings of $4.17 earnings a share on $84 billion of sales.
Also in focus will be Apple’s services business, Huberty added. CEO Tim Cook said at the beginning of the year that Apple services generated over $10.8 billion in revenue during the December quarter, growing to a new quarterly record in every geographic segment. Morgan Stanley thinks Apple’s services revenue grew 19% year-over-year, above the Wall Street consensus of 14% growth.
Apple will roll out new services soon, Cook said in exclusive interview with CNBC on January 8. While he didn’t go into specifics, he indicated that Apple will provide some healthcare services to be viewed as “Apple’s greatest contribution to mankind.”
Huberty has an “overweight” rating and a $211 price target – 34% above where shares were trading Friday.
Apple is set to report its quarterly results on January 29. The stock was down 9% last year.
- Markets Insider