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Apple inventory leads Dow increased after Morgan Stanley cites 'enticing' earnings setup – jj

Apple inventory leads Dow increased after Morgan Stanley cites 'enticing' earnings setup


Apple Inc. shares are rising in Monday trading after an analyst at Morgan Stanley praised the “attractive” setup heading into the company’s earnings report next Tuesday.

Morgan Stanley’s Katy Huberty raised her price target on Apple’s stock

AAPL, +2.29%

to $247 from $231, writing that the smartphone giant faces only a “low risk” of disappointing with its September outlook given a low bar on Wall Street. She also pointed to improving China data points, which could have positively impacted Apple’s soon-to-be-reported June numbers.

“Investor sentiment remains negative despite improving iPhone and services data points,” Huberty said in her note to clients. She expects that Apple could show an acceleration in services revenue for the first time since March 2018, “a key catalyst for regaining investor confidence in the services narrative,” she said. Huberty rates the stock overweight.

Don’t miss: Big Tech’s antitrust suspects enter earnings spotlight, along with Boeing and Tesla

Heading into 2020, Huberty sees further opportunities for Apple to surprise investors, writing that the stock looks like a top pick for the second half of 2019. She said that consensus estimates aren’t baking in an expectation for services reacceleration in the second half of the calendar year, even though Apple is expected to launch, and give more information about, important new services offerings such as Apple TV+ and Apple Arcade then.

Huberty is also upbeat about the 5G iPhone cycle, which she expects could have “a more meaningful impact on iPhone shipment growth as compared to the iPhone X, which was launched at a time when replacement cycles were lengthening due to the shift away from handset subsidies.” Apple is widely expected to introduce 5G iPhones in the fall of 2020.

See also: Apple stock gets an upgrade as analyst sees ‘compelling’ reason to buy forthcoming iPhone models

Shares were up 1.7% in Monday morning trading even as the Dow Jones Industrial Average

DJIA, +0.07%

gave up an early advance. The stock is up 31% so far this year, as the Dow has risen 16%.

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