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- Investors should take advantage of the recent sell-off in shares of Apple, as it provides a "compelling entry point" ahead of its upcoming iPhone 12 launch, Morgan Stanley said on Friday.
- Shares of Apple fell 20% from their September 2 high, outpacing the broader market decline as technology stocks led the market lower throughout September.
- Morgan Stanley reiterated its "overweight" rating and $130 price target for Apple, representing potential upside of 20% from Thursday's close.
- Here are three reasons why investors should buy the dip in Apple, according to Morgan Stanley.
- Visit Business Insider's homepage for more stories.
Ahead of the upcoming much anticipated iPhone 12 launch, investors should take advantage of the recent sell-off in shares of Apple and buy the dip.
That's according to Morgan Stanley's Katy Huberty, who reiterated in a note on Friday Apple's "overweight" rating and $130 price target, which represents 20% upside potential from Thursday's close.
Specifically, Huberty said she believes that strong data points in Apple's business run counter to the recent stock decline of 20%, which outpaced the broader market as technology stocks led it lower ever since record highs were reached on September 2.
Therefore, shares of Apple currently present a "compelling entry point" ahead of Apple's next iPhone launch, Huberty said.
Here are three reasons why investors should buy the dip in Apple, according to Morgan Stanley.
1. Store reopenings are accelerating.
"We continue to see the pace of Apple's retail store reopenings accelerating. While Apple has reopened 57 total US stores in the last 4 weeks, yesterday, September 23rd, Apple reopened a total of 30 retail stores in the US ... This brings Apple's total open retail store count to 446 of 512 stores (87% of all stores)," Huberty said.
2. Apple supplier reported strong earnings.
Jabil reported strong earnings on Friday that beat analyst estimates. Apple represents 22% of Jabil's revenue, according to Morgan Stanley.
Huberty highlighted that during Jabil's earnings call, Chief Financial Officer Michael Dastoor said mobility was a big driver of its revenue upside in the quarter. "The out of season launch (read: iPhone SE) continues to perform extremely well. In tandem with this, the upcoming next-generation launch, which will begin in Q4, is going extremely well," Dastoor said.
3. There is strong demand for Apple's Mac and Macbook lineup.
"We continue to see lead times extending for Apple's Mac and Macbook lineup, which we believe points to strong demand, rather than a lack of supply, for Apple's computer products ... we forecast Mac revenue growth accelerating to 29% Y/Y in the September quarter, which we believe better aligns with the improving Mac data points and easier Y/Y compares," Huberty said.
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