From a note to clients by Morgan Stanley analyst Katy Huberty that landed in my inbox Wednesday:
Steady supply chain and demand data points clear path to supercycle.
Morgan Stanley’s AlphaWise tracker, which compiles sell-through data using web search analysis, indicates 60M unit demand for the March quarter. Historically, our Tracker has been accurate directionally, though we think the magnitude of the iPhone demand upside this quarter is likely overstated, and attribute some of the upside to elevated search interest in anticipation of the 10th anniversary iPhone launch.
Net, we maintain our 51M March quarter iPhone forecast, roughly in-line with consensus, raise March Q ASP 2% to $675, and see the company reporting revenue at the upper end of the $51.5B to $53.5B range (our new estimate is $52.9B, up from $52.2B). We continue to expect a 38.9% gross margin, at the upper end of 38-39% guidance range, and EPS of $2.03, in line with consensus.
Reiterate Overweight, raise price target to $161 from $154.
What stands out in Huberty’s charts is the magnitude of China’s pent-up iPhone demand: