Morgan Stanley raises Apple stock price after earnings report

An Apple Store sign

Morgan Stanley was oddly bullish about Apple even as it dropped its price target from $220 to $210. Following Apple’s Q2 2024 earnings report, the company has increased its price target to $216, and sounds as if it feels vindicated.

“Apple guided to an above-Street June Q, alleviated concerns about China iPhone [sales], reached an all-time Services rev & GM record, authorized its largest incremental buyback in history, & hinted at Gen AI announcements to come in weeks,” said the company in a note to investors seen by AppleInsider. “It’s hard not to be more bullish after that.”

Morgan Stanley dismissed the falling iPhone sales figures, saying that the decline was much less than expected. It also noted that year over year, the iPhone actually grew in mainland China.

Describing some relief that Apple’s guidance for the next quarter was better than had been feared, Morgan Stanley also claimed that Apple’s declining share price seemed to be over. It further notes that this point in the year is typically when Apple outperforms market estimates anyway, and believes that it sees growth in low to mid teen figures in 2025.

The analysts do say that they believe more needs to be done by Apple in China. But it also criticized the third-party data that has erroneously been claiming calamitous drops in iPhone sales.

At the same time, Morgan Stanley believes that the iPhone is no longer the sole growth driver for Apple. Instead, its analysts point to the record Services gross margin of 74.6%, an all-time quarterly record.

Consequently, Morgan Stanley has increased its predictions for Apple Services growth. It says there’s no sign of Apple’s Services slowing down, and the mix of that plus devices has helped with the overall margin performance.

Morgan Stanley is now looking to the expected AI announcements at WWDC 2024 for a boost to iPhone sales.