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Investing.com -- Morgan Stanley said Apple could be “turning the corner” after stronger-than-expected iPhone sales drove an upward revision in September-quarter production plans.
The bank’s Greater China Technology Hardware team lifted its September-quarter iPhone build forecast by 8%, from 50 million units to 54 million units, citing “better than expected iPhone sell-through in the June quarter” and “low channel inventory” that created a “larger channel fill opportunity.”
The revision was “entirely iPhone 16 (2M units) and Pro Max (2M units) models.”
While the firm already factored in a similar trend with its 55 million shipment forecast for the quarter, Morgan Stanley said the build increase raises the potential for upside in the December quarter.
The analysts explained that based on historical seasonality, December builds could range from 73 million to 92 million units, but the analysts expect a more realistic 73 million to 81 million, translating to 76 million to 84 million shipments.
C2H25 iPhone 17 builds remain unchanged at 80 million to 85 million units, compared with 84 million for the iPhone 16 in C2H24.
On the stock, Morgan Stanley said it is “turning more bullish” after being cautious since March. It reiterated an Overweight rating and a $240 price target on the stock.
“We think the Apple story could be turning the corner,” stated the bank, pointing to cited “elongated replacement cycles,” “pent-up iPhone demand,” “structural gross margin tailwinds,” and easing tariff and regulatory headwinds.
Pricing remains an “under-appreciated lever,” with Apple yet to raise services prices in two years.
“Estimates are biased upwards from here,” the analysts wrote, adding that Apple could see “multiple expansion” if forecasts improve.
With institutions “more underweight Apple than any other megacap tech stock” and hedge funds “biased neutral to short,” Morgan Stanley said the company is “one potential AI partnership away from breaking out.”