Apple Valuation Leaves Less Room for Disappointment

Morgan Stanley analyst Erik Woodring says Apple's iPhone sales are steady despite entering the cycle with more supply than last year. He notes that delivery lead times for the Pro and Pro Max models are roughly two to four weeks, which is broadly unchanged from last year. However, he cautions against placing too much weight on lead times as they reflect both demand and supply.

Woodring points out that Apple's production of the Pro and Pro Max models is up about 18% year over year for the second half of the calendar year. This suggests that flat lead times alongside higher supply could point to healthy demand, especially in China, where shorter lead times are seen compared with last year.

Woodring believes some Chinese consumers may be waiting for Apple's Duo foldable device before choosing between the new premium models. He expects the Duo to become particularly useful for travel, entertainment, and multitasking, citing CNBC's Jim Cramer's praise of the device's display and crease-free design.

However, Woodring notes that Apple's valuation leaves less room for disappointment. He says the stock is trading at a 'relatively rich valuation' of about 33 times his fiscal 2027 earnings estimate, close to its historical peak multiple of roughly 34 to 35 times.