UPDATE 2-Morgan Stanley raises Apple to overweight

martedì 26 maggio 2009 16:34

(Adds comments from Global Equities Research, updates share movement)

By Mansi Dutta

May 26 (Reuters) - Morgan Stanley upgraded Apple Inc (AAPL.O: Quotazione) to "overweight," saying the iPhone maker is emerging as the clear leader in the battle over mobile Internet and will see iPhone-driven earnings growth over the next two years.

Apple shares rose more than 5 percent to $129.13 in morning trade on Nasdaq.

"The core of our stock call is that the iPhone's success and higher margins will begin to mute the fundamental margin and growth risks in Apple's core Mac/iPod businesses," analyst Kathryn Huberty wrote in a note to clients.

The analyst, who raised the price target on the stock to $180 from $105, said the market is underestimating iPhone unit demand in the second half of 2009 and 2010 which will accelerate earnings growth, estimate revisions and multiple expansion.

Huberty said iPhone will drive about 50 percent of Apple's earnings per share in 2010, up from 30 percent in 2008.

"We expect a price cut to the current generation iPhone to drive 50 percent to 100 percent (2 million to 4 million units) incremental unit demand," Huberty said.

"Our survey data suggests 15 percent plus of the iPhone installed base typically upgrade to a new phone."   Continua...