Tim CookSource: Apple

What you need to know

  • Morgan Stanley has raised its target share price for Apple to $164, up from $152.
  • Analyst Katy Huberty cited faster iPhone share gains, installed base growth, and the monetization of services as reasons to expect continued strong revenue and margins.

Morgan Stanley has raised its Apple target share price to $164, up from $152 on the back of Apple's Q1 revenue report.

In a new investment note, analyst Katy Huberty stated:

"Faster iPhone share gains, installed base growth, and services monetization were highlights of the better-than-expected F1Q. We expect Street estimates to move higher on a stronger rev guide and higher gross margin."

The note calls on investors to expect stronger revenue and margin trends to continue, and suggests that the combination of a larger installed base, "fully refreshed product portfolio", and continued work from home trends "suggest strong double-digit growth over the next several quarters". Huberty also estimates Apple will see a compound annual growth rate of 10% over the next five years.

As the note states, Apple's earnings announcement yesterday blew out consensus revenue and earnings per share estimates by 8% and 19% respectively, with Services growth and iPhone strength "especially in China" helped Apple beat out expectations. Whilst Apple didn't provide any formal guidance for the next quarter, it did suggest it expected "normal seasonal revenue trends" to follow, which Huberty pegs at around $76B-$78B in the March quarter, around $3B ahead of expectations.

Apple announced its Q1 2021 financial results yesterday. From that report:

Apple® today announced financial results for its fiscal 2021 first quarter ended December 26, 2020. The Company posted all-time record revenue of $111.4 billion, up 21 percent year over year, and quarterly earnings per diluted share of $1.68, up 35 percent. International sales accounted for 64 percent of the quarter's revenue.

Apple's share price is currently $142, down very slightly in pre-market trading.