People sure love predicting doom and gloom for Apple — but that might actually turn out to be a good thing. At least, as far as investors are concerned.
According to Morgan Stanley analysts, Apple is way over-performing current negative perceptions about its business. And that’s going to pay off in spades when it comes to the next earnings announcement.
“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,” noted analyst Katy Huberty in a note to clients.
As a result of this negativity, Morgan Stanley considers Apple to be undervalued. It has increased its price target from $231 to $247.
Currently Apple is trading at $207.22. That gives it a market cap of $953.4 billion, still a little under $50 billion below the $1 trillion mark. That was the number Apple hit last summer, when it became the first public $1 trillion company in history. It’s since been joined by Amazon and Microsoft.
Huberty thinks that Apple’s Services division will pick up steam in the third quarter of the year. Specifically, she thinks growth will accelerate for the first time since March 2018. This will likely increase “investor confidence.”
Apple shares have risen more than 30% this year. It will publish its next earnings statement on July 30.
Not everyone is convinced
Not everyone is quite as upbeat as Morgan Stanley, however. (Which, we guess, kind of proves the firm’s point.) CNBC “Mad Money” host Jim Cramer isn’t totally convinced by the firm’s appraisal.
Cramer says he thinks it would be a “mistake” to buy Apple shares right now. “One thing’s for sure after this run, it would be a mistake to buy Apple going into the quarter, unless you get a meaningful pullback beforehand,” he said. “The gulf between the bulls and the bears is just too wide for us to game Apple.”