Apple Inc. (NASDAQ:AAPL) shares have fallen in recent weeks. A variety of reasons have been suggested. Some analysts have been so spooked that they changed their opinion less than three weeks after authoring 50 page report on why Apple Inc. (NASDAQ:AAPL) is a good buy. However, Morgan Stanley is bullish on the tech giant, and re-iterates that view in a report released today.
Despite concerns to the contrary, iPhone and iPad demand remain strong, according to analysts at Morgan Stanley. C4Q US iPhone purchase intentions beat their forecast. Stable 50% iPad share also was a pleasent surprised , as Morgan Stanley expected a drop next
year. Morgan Stanley (NYSE:MS) remain overweight on Apple, and place the stock Morgan Stanley’ Best Idea; the recommend owning into early 2013. We highlight their reasons below:
A Morgan Stanley survey of over 1,000 US consumers indicates strong iPhone 5 demand in C4Q12
US C4Q iPhone growth of 33% matches their above consensus global forecast of 35%, despite higher US penetration. Importantly, a greater percentage of consumers plan to purchase the higher priced iPhone 5 as compared to iPhone 4S mix a year ago. As a result, they see potential upside to both their 50M unit (+35% Y/Y) and $642 (-4%) ASP assumptions in C4Q.
iPad share surprisingly resilient and iPad Mini cannibalization concerns overblown
iPad share is expected to remain at 50%, better than their forecast of a 6-point share drop in 2013 and despite more low-priced offerings from competitors. iPad mini is a key demand driver, accounting for 34% of planned iPad purchases. Forty-seven percent of iPad mini purchases are to new customers, only slightly lower than the 56% for iPad 9.7” suggesting cannibalization risk is manageable.
Apple holding its own against Samsung
Rising Samsung share is at the expense of other Android Smartphones and tablets as iPhone share of new purchases is also expected to rise (4 pts) over the next year. iPad purchase intention share held steady at 50%.
Apple a clear winner during the 2012 holiday season
Tablets are the number one gift idea in consumer electronics this year, while it was a tie between tablets and e-readers last year. By vendor, Apple Inc. (NASDAQ:AAPL) ranks highest with 38% of respondents planning to buy its products as gifts this year, up from 34% last year.