Morgan Stanley on Apple: ‘Attractive setup into earnings’

Despite unusually negative sentiment on Wall Street, Apple is well-positioned heading into earnings, according to Morgan Stanley.

The firm maintained its overweight rating on Apple’s stock and hiked its price target to $247 from $231, heading into the tech giant’s third-quarter earnings on July 30.

It’s an “attractive setup into earnings,” said Morgan Stanley equity analyst Katy Huberty in a note to clients Monday. “The combination of negative investor sentiment, the potential for a services acceleration in June, and a low bar for September guidance keep us positively biased into earnings.”

Investor sentiment for technology company Apple, which has a market value of about $932 billion, has been usually negative, said Huberty. This is despite the shares bounding back about 20% from Apple’s bottom in May.

Shares of Apple rose slightly in pre-market trading Monday.

Huberty said she expects third-quarter services revenue growth to accelerate for the first time since March 2018. She said this is “a key catalyst for regaining investor confidence in the Services narrative and multiple re-rating.”

Huberty also said Wall Street’s September quarter estimates “imply a low bar” for the stock, keeping Morgan Stanley bullish on Apple for the rest of 2019.

“We see multiple catalysts beyond earnings that make Apple a top pick into year end,” said Huberty.

Shares of Apple have risen more than 5% in the past 12 months and nearly 30% so far this year.

—with reporting from CNBC’s Michael Bloom.