Analysts have labeled Apple a “top pick” for investors in 2017.
Morgan Stanley predicts Apple will have a successful year due to a variety of factors, including the much-anticipated iPhone 8, a potential 11-point deduction in tax rate, and consumer loyalty in China where iPhone sales are expected to grow 20 percent.
It’s not often analysts are positive about Apple’s future these days, but Katy Hubert at Morgan Stanley believes the naysayers are “focusing too much on near-term supply chain noise and not enough on three potential catalysts.”
One of those catalysts is the next-generation iPhone, which is expected to be a substantial upgrade with an all-new form factor that sports curved glass and an OLED display, new charging technology, and a faster A-series processor.
The second catalyst, Hubert says, is that Apple is “the largest potential beneficiary if cash repatriation,” with approximately $216 billion sat in banks overseas. The third is a tax reduction of as much as 11 percent.
“Of the three catalysts, we believe the iPhone supercycle is most debated by investors who see China as a risk, not an opportunity, after weak demand in recent quarters.”
Hubert says that consumer loyalty to Apple remains high in China, where the company commands a stable 80 percent share of the high-end market. She blames weak demand on the fact that there was no iPhone redesign last year, but that will be addressed in 2017.
Morgan Stanley expects that the iPhone upgrade rate in China this year will lead to a 20 percent rise in unit growth, compared to the current 10 percent.
Via: Carl Quintanilla
