Apple Shares Rise After Morgan Stanley Endorsed Apple Stock As "top Pick"

(RTTNews) - On Monday, Apple's stock (AAPL) experienced an increase following positive feedback from Wall Street analysts.

Morgan Stanley's analyst, Erik Woodring, reiterated his positive outlook on Apple's stock and raised his price target to $273 from $216, endorsing Apple as a "top pick."

Woodring mentioned in a client note, that Apple's AI technology, known as Apple Intelligence, is expected to be a significant driver in a multiyear product upgrade cycle, potentially boosting sales of iPhones and iPads over the next two years.

As per Woodring's analysis, Apple is projected to ship nearly 500 million iPhones over the next two years, indicating a 6% increase from the previous record cycle. This could also lead to a 5% annual growth in iPhone ASP (average selling price). Woodring further predicts iPhone shipments of 235 million units in fiscal 2025 and 262 million in fiscal 2026, with the iPhone 16 series launch marking the commencement of the upgrade cycle in mid-September.

Additionally, Loop Capital analyst Ananda Baruah upgraded Apple's stock to buy from hold, setting a new price target of $300, up from $170. Baruah emphasized the opportunity for Apple to establish itself as the preferred choice for consumers in the realm of AI, particularly in driving iPhone upgrades. The prospect of AI-enhancing iPhone upgrades positions Apple as a frontrunner in generative artificial intelligence applications for consumers.

It's worth noting that the adoption of Apple Intelligence will necessitate users to upgrade to an iPhone 15 Pro or a newer model, potentially contributing to a positive mix shift and ASP growth for Apple. The estimates suggest that 66% to 69% of shipped iPhones in the financial years 2025 and 2026 will be new models, hinting at a potential 4% to 5% annual iPhone ASP growth. Moreover, only 24% of iPad models currently support Apple Intelligence, pointing towards a potential "mini upgrade cycle" for the tablets and potentially shortening the iPad replacement cycles to 3.8 years, according to AppleInsider.

AAPL is trading on the Nasdaq at $234.38, up %1.70 or $3.80 per share. It has traded between $164.08 and $237.23 in the past 52-week period.