Apple Inc. (NASDAQ:AAPL) shares are recovering today after dropping below $500 per share and remaining there for most of Tuesday. The stock rose 3 percent in morning trades, increasing by more than $15 per share to settle just above $500 per share. Meanwhile analysts at Morgan Stanley (NYSE:MS) agree with those at Sterne Agee in their expectations of a strong December quarter for Apple Inc. (NASDAQ:AAPL).

In a report to investors this morning, Morgan Stanley (NYSE:MS) analysts said they believe strong demand for Apple products in the U.S. will translate to an upside for iPhone and iPad sales and a higher than expected gross product margin. They believe that seasonality concerns for the first quarter of the 2013 calendar year are “overblown” and see several catalysts for growth this year. Morgan Stanley said they see a six to one upside to their base case of $714 per share versus the downside to their bear case of $450 per share.

The analysts said they believe Apple Inc. (NASDAQ:AAPL) will beat consensus expectations for the fourth quarter of the 2012 calendar year. The consensus for revenue is $54.6 billion, while the consensus for earnings per share is $13.35 per share. They believe shipments of the iPhone “drove the upside” and say their analysis of data from their survey and U.S. carriers indicate that demand was stronger than expected.

Morgan Stanley (NYSE:MS) analysts also said investor concerns about iPhone shipments for the current calendar quarter are overblown. They expect Apple Inc. (NASDAQ:AAPL) to ship 40 to 45 million iPhone units in the current quarter, compared with the expectations of 34 to 40 million units.

They see four main catalysts for Apple Inc. (NASDAQ:AAPL). They said the iPhone launch that’s planned for this summer could have a less expensive version introduced along with it, much like the iPad Mini. They also say they expect new iPads, including an iPad Mini with a retina display sometime this summer. Third, they believe that this year Apple will expand its partnerships with carriers to T-Mobile in the U.S., NTT Docomo in Japan and / or China Mobile. And finally, they expect the company to increase its share repurchases this year.

Morgan Stanley has rated shares of Apple Inc. (NASDAQ:AAPL) as Overweight and listed their price target at $714 per share.