Morgan Stanley is Optimistic About Apple’s Next Earnings Report

According to Morgan Stanley analysts, tech giant Apple will be a winner when they announce their next earnings report this week on Thursday.

The world’s largest technology company by revenue, could outperform its second-quarter earning result consensus estimates on the back of better-than-expected hardware sell-in say analysts at the bank.

According to Katy L. Huberty, equity analyst at Morgan Stanley, she forecast revenue and EPS of $55.1 billion and $2.18, respectively.

“June quarter results likely to outperform consensus estimates on the back of better than expected hardware sell-in. We currently forecast June quarter revenue and EPS of $55.1B and $2.18, 7% and 8% above current consensus estimates, respectively, on the back of stronger than expected intra-quarter data points across nearly all Product segments. We currently forecast $24.1B and $4.9B of iPhone and iPad revenue, respectively, in the June quarter vs. consensus of $22.4B and $4.9B,” said Huberty.

“We currently forecast June quarter Services revenue of $13.4B (+16.7% Y/Y), 1% above the consensus estimate of $13.2B (+15% Y/Y) and nearly 5 points higher than our original June quarter Services forecast largely due to record results from the App Store, which we estimate grew 30% Y/Y in the June quarter, the fastest quarterly growth in 3 years, as consumers remained at home for much of the quarte,” Huberty added.

“Our $419 price target is sum-of-the-parts driven. We apply a 5.0x EV/Sales multiple on Apple’s mature hardware business (iPhone, iPad and Mac), a 4.9x EV/Sales multiple on Apple’s ‘Wearables, Home and Accessories’ business and a 7.7x EV/Sales multiple on Apple’s Services business, in-line with their respective peer groups. This results in an implied 5.5x target FY21 EV/Sales multiple and a 26.5x target FY21 P/E multiple,” Huberty said.

Thirty-three analysts forecast the average price in 12 months at $367.45 with a high forecast of $450.00 and a low forecast of $250.00 on Apple shares.

Disclaimer: We have no position in Apple Inc. (NASDAQ: AAPL) and have not been compensated for this article.