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Analysts raise Apple price targets but warn against inflated expectations

By Hazel Davis

Apple’s stock is up 103 per cent over the last 12 months

Analysts from Morgan Stanley and Nomura have increased their price targets for Apple stock, with caveats.

Morgan Stanley upped its price target from $296 (£227, €266) per share to $368 per share while Nomura has raised its projection from $225 per share to $280.

The multinational’s stock is up 103 per cent over the past 12 months, hovering around year lows at the beginning of 2019.

Morgan Stanley projected that Apple will continue to outperform its peers, thanks in part to the upcoming 5G product cycle. But Nomura warned that inflated expectations around iPhone 12 “may make the music stop”. It also questioned the market enthusiasm around a 5G supercycle and cautioned that this could be misguided. Morgan Stanley’s note reminded investors that the current iPhone replacement cycle has stretched to nearly four years.

Upgrade rates declined during the 3G to 4G cycle, said Nomura, and Apple has ordered between 75 and 85m iPhone 12 models for the second half of 2020. This is an increase of 10 per cent from the second half of 2019.

However, the trillion-dollar company's dependency on the iPhone for earnings has decreased. Apple Services now constitute 27 per cent and wearables 37 per cent of profits, said the analyst. Moreover, the company recently launched its own streaming service, with proprietary programming. Apple will report its first-quarter 2020 earnings on 28 January.

FURTHER READING: Apple stock predictions for 2020 and beyond

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