Tech titan Apple (AAPL) is set to report its second-quarter results on April 30, and analysts at Morgan Stanley (MS) believe that the release could act as a major turning point for the stock. In particular, five-star analyst Erik Woodring described the upcoming report as a potential “clearing event” that could remove uncertainty and reset expectations. As a result, this could help position the stock for more upside, especially as Apple moves closer to key events like its developer conference in June and the next iPhone launch in September.
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Interestingly, though, Morgan Stanley expects to see mixed trends within the results, but with a positive overall outcome. While gross margins may come under pressure due to rising memory costs, stronger revenue from key segments like iPhone, Mac, and Services is expected to offset that weakness. Therefore, the firm believes that Apple could deliver a “better-than-feared” result, especially given that expectations are currently low. In addition, Woodring expects Apple’s guidance for the June quarter to come in roughly in line with estimates, with earnings per share around $1.74, which would still be seen as a solid outcome.
Apple is also entering what is typically a strong seasonal period that could see potential revenue growth of around 15% due to market share gains. Meanwhile, modest expectations for upcoming events leave room for positive surprises, such as a foldable iPhone. In addition, Apple’s strong free cash flow sets it apart from competitors that are heavily spending on AI. When combining this with a valuation that’s near the middle of its historical range, Morgan Stanley sees a path for Apple shares to reach $300 by September.
Is Apple a Buy or Sell Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on AAPL stock based on 16 Buys, eight Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average AAPL price target of $304.85 per share implies 11.8% upside potential.
