Morgan Stanley notes the key bear case on Apple (NASDAQ:AAPL) shares is that iPod unit growth is slowing with no clear indication ofnew products to pick up the slack. While they don't disagree this would be a negative scenario for the stock, growing research and development expense indicates a product cycle is in the works. If history is any indicator, this is the wrong time to bet against AAPL.
Apple R&D (reported + capitalized) grew faster in the last three quarters than at any time in the company’s recent history. This line item has proven to be a clear indicator of future product cycles that drive fundamentals and stock performance. MSCO believes the last 9 months present a fourth cycle that is supportive of long-term fundamentals
Ultimately, future product cycles are key to stock performance and they view late Spring/Summer as the next potential timeframe for announcements.
Stock Implication: While macro concerns may prove an overhang in the near-term, investors should take advantage of pullbacks to build positions over the next three months - ahead of March quarter results and potential mid-year product announcements.
Notablecalls: Nice defense by MSCO's Kathryn Huberty. Yet, the news from Synaptics (SYNA) tells us Apple is sitting on excess inventory and that it likely told vendors to expect lower-than-normal ordering in the March quarter. Yet, the June quarter guidance coming from SYNA was OK. So, just a blip, likely bc of ipod. But that should not come as a surprise.
I think SYNA is a bounce candidate here @ $24. and I continue to be positive on AAPL.
Apple R&D (reported + capitalized) grew faster in the last three quarters than at any time in the company’s recent history. This line item has proven to be a clear indicator of future product cycles that drive fundamentals and stock performance. MSCO believes the last 9 months present a fourth cycle that is supportive of long-term fundamentals
Ultimately, future product cycles are key to stock performance and they view late Spring/Summer as the next potential timeframe for announcements.
Stock Implication: While macro concerns may prove an overhang in the near-term, investors should take advantage of pullbacks to build positions over the next three months - ahead of March quarter results and potential mid-year product announcements.
Notablecalls: Nice defense by MSCO's Kathryn Huberty. Yet, the news from Synaptics (SYNA) tells us Apple is sitting on excess inventory and that it likely told vendors to expect lower-than-normal ordering in the March quarter. Yet, the June quarter guidance coming from SYNA was OK. So, just a blip, likely bc of ipod. But that should not come as a surprise.
I think SYNA is a bounce candidate here @ $24. and I continue to be positive on AAPL.
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