Apple Inc. (AAPL)’s Stock Poised for a Major Breakout: Morgan Stanley

Apple Inc. (NASDAQ:AAPL)’s stock sailed past $100 today, up nearly 1.5% at least partially on the strength of a new investor report released by Morgan Stanley which offers a glowing assessment of the company’s outlook ahead of the release of the next iPhone models. Business Insider examined the Morgan Stanley report and divulged eight of its key reasons as to why Apple Inc. (NASDAQ:AAPL)’s stock won’t suffer the same fate it did after the iPhone 5 release two years ago.

Apple Inc. (AAPL)

In finance-related measures, Morgan Stanley analyst and report author Katy Huberty points to the low institutional ownership rates of Apple Inc. (NASDAQ:AAPL) stock, at just 2.3% of the portfolios of the top 100 institutional holders of shares. That is little more than half its peak of 4.5% in 2012, and well below even the S&P 500’s 3.4% rating.

There’s also the matter of Apple Inc. (NASDAQ:AAPL) greatly increasing their cash dividends to $11 billion from $2 billion in 2012, and repurchasing $31 billion in shares, for a total yield of 8.5% compared to 0.5% when the iPhone 5 was launched, which should result in share prices increasing. The report also touched on the sizable investments Apple Inc. (NASDAQ:AAPL) has made over the past two years, and particularly this year in R&D, M&A, and talent acquisition.

Those factors aside, it still comes down to products, and the report believes Apple has two big winners on their hands with the iPhone 6 and its larger screen, as well as the rumored iWatch, which the report estimates could sell 60 million units of within a year. While 60 million is on the upper end of the estimation spectrum, even lower estimates have Apple Inc. (NASDAQ:AAPL) selling at least 35 million iWatches within a year.

One factor to consider in opposition to the rosy report glow is that the iPhone 6 and its larger screen will likely further erode already waning iPad sales. However, if the iWatch can replace it and provide the high margins that are expected of it, those sales won’t be missed.

Huberty maintains a target price of $110 on Apple Inc. (NASDAQ:AAPL) shares.

Disclosure: none

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