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Apple: Why Morgan Stanley Finds It Attractive

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Apple (AAPL) is scheduled to release its earnings for the first quarter of fiscal 2019 on January 29 after the market closes. On January 2, Apple CEO Tim Cook announced a downward revision to the company’s first-quarter guidance, which drove the pessimism among investors. As a result, Apple stock fell 10.0% on January 3. While investors might be avoiding making a long position in the stock due to concerns about falling iPhone sales, some analysts think that Apple is attractive.

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Morgan Stanley finds Apple attractive

According to CNBC, in a note on January 25, Morgan Stanley analyst Katy Huberty said, “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.” Huberty partly based her argument on many analysts’ lower expectations. The expectations are lower for Apple’s first-quarter earnings since the company lowered its guidance earlier this month. Huberty thinks that most of the negativity about the company’s falling sales might have already been factored into its stock price.

However, Huberty thinks that “Apple likely needs to deliver a better than feared revenue outlook for shares to recover further in the very near-term.”

Huberty’s suggestion to “buy” Apple stock will likely boost investors’ confidence before the company releases its first-quarter earnings next week.

As of January 24, Apple and Qualcomm (QCOM) were trading with 2.2% and 10.7% month-to-date losses, respectively. Microsoft (MSFT), NVIDIA (NVDA), Alphabet (GOOG), Facebook (FB), Amazon.com (AMZN), Netflix (NFLX), Oracle (ORCL), Intel (INTC), Advanced Micro Devices (AMD), and Micron (MU) have risen 4.6%, 18.2%, 3.7%, 11.2%, 10.2%, 22.0%, 9.0%, 6.0%, 12.9%, and 15.3%, respectively, in January.

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