Apple Inc. shares are rising in Monday trading after an analyst at Morgan Stanley praised the â€œattractiveâ€ setup heading into the companyâ€™s earnings report next Tuesday.
Morgan Stanleyâ€™s Katy Huberty raised her price target on Appleâ€™s stock
to $247 from $231, writing that the smartphone giant faces only a â€œlow riskâ€ 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 Appleâ€™s soon-to-be-reported June numbers.
â€œInvestor sentiment remains negative despite improving iPhone and services data points,â€ 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, â€œa key catalyst for regaining investor confidence in the services narrative,â€ she said. Huberty rates the stock overweight.
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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 arenâ€™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 â€œa 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.â€ Apple is widely expected to introduce 5G iPhones in the fall of 2020.
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Shares were up 1.7% in Monday morning trading even as the Dow Jones Industrial Average
gave up an early advance. The stock is up 31% so far this year, as the Dow has risen 16%.