- Morgan Stanley is out positive on Apple (NASDAQ:AAPL) saying co's operating leverage remains underappreciated by investors and is the main driver of firm's increased earnings forecast and price target.
MSCO believes Apple's operating margin will continue to improve from two factors:
1) Apple's operating expenses grow at 1/2 the rate of revenues. If this relationship holds going forward, every $1bn of incremental CY08 revenue drives 30 bps operating margin; and
2) Product sold through Apple's retail stores earns as much as 14 points incremental profit. All else equal, a 5 point increase in the mix of revenues through Apple stores adds 50 bps operating margin.
Firm's CY08 operating margin increases to 19.8% (from 16.7%) and CY08 EPS shifts to $5 (from $4.29). They continue to believe earnings and stock revisions are heavily weighted to the upside and think that even $7 in EPS may be doable in CY08. New tgt stands at $150. Maintains Overweight.
Notablecalls: New 52 wk high coming for AAPL today. Expect to see at least couple of points of immediate upside. Actionable call!
MSCO believes Apple's operating margin will continue to improve from two factors:
1) Apple's operating expenses grow at 1/2 the rate of revenues. If this relationship holds going forward, every $1bn of incremental CY08 revenue drives 30 bps operating margin; and
2) Product sold through Apple's retail stores earns as much as 14 points incremental profit. All else equal, a 5 point increase in the mix of revenues through Apple stores adds 50 bps operating margin.
Firm's CY08 operating margin increases to 19.8% (from 16.7%) and CY08 EPS shifts to $5 (from $4.29). They continue to believe earnings and stock revisions are heavily weighted to the upside and think that even $7 in EPS may be doable in CY08. New tgt stands at $150. Maintains Overweight.
Notablecalls: New 52 wk high coming for AAPL today. Expect to see at least couple of points of immediate upside. Actionable call!
2 comments:
THIS IS NOT ME, BUT, ACCORDING TO WD GANN---USING PERCENTAGES FROM LOWS-07/01/97-$3.1875 TIMES 3/8'S OR 375%= $119.53125 AT $120--IT IS 1/3 OF A CIRCLE. I BOUGHT PUTS,AT 120, CLOSED THEM OUT, AT 118.60, TOOK ONE DAY 1.75 PER CONTRACT, BOUGHT CALLS, STOCK GOING BACK TO 12O, WILL CLOSE CALLS, AND BUY PITS.THURS.,AND FRI.IS THE LEFT SHOULDER OF HEAD, AND SHOULDERS TO COME THIS WEEK. LAST YEARS PULLBACK TO $60 IS 1/6 TH OF A CIRCLE, AND MOVE TO 120 IS A DOUBLE, OR 200% RISE.
AAPL HISTORICALLY MAKES LOWS IN JULY. WATCH, AND SEE IT COME TRUE! AND POWER OF THE POWER OF THE CIRCLE. THIS COMING WEEK RIGHT SHOULDER WILL APPEAR BEFORE YOUR EYES. AND YOU WILL BELIEVE IT THEN.
THIS IS NOT ME, BUT, ACCORDING TO WD GANN---USING PERCENTAGES FROM LOWS-07/01/97-$3.1875 TIMES 3/8'S OR 375%= $119.53125 AT $120--IT IS 1/3 OF A CIRCLE. I BOUGHT PUTS,AT 120, CLOSED THEM OUT, AT 118.60, TOOK ONE DAY 1.75 PER CONTRACT, BOUGHT CALLS, STOCK GOING BACK TO 12O, WILL CLOSE CALLS, AND BUY PITS.THURS.,AND FRI.IS THE LEFT SHOULDER OF HEAD, AND SHOULDERS TO COME THIS WEEK. LAST YEARS PULLBACK TO $60 IS 1/6 TH OF A CIRCLE, AND MOVE TO 120 IS A DOUBLE, OR 200% RISE.
AAPL HISTORICALLY MAKES LOWS IN JULY. WATCH, AND SEE IT COME TRUE! AND POWER OF THE POWER OF THE CIRCLE. THIS COMING WEEK RIGHT SHOULDER WILL APPEAR BEFORE YOUR EYES. AND YOU WILL BELIEVE IT THEN.
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