Morgan Stanley Warns of Apple Stock Headwinds Amid Supply Constraints
Apple's recent earnings report sent a cautionary message from Morgan Stanley. Despite beating Wall Street's expectations for both earnings and revenue in the fiscal third quarter, Apple's stock tumbled 7.35% on July 31.
The company reported adjusted earnings of $1.91 per share, topping estimates of $1.89, while revenue came in at $109.42 billion, ahead of the $108.65 billion consensus.
However, Apple issued weak guidance, citing 'supply constraints' as it navigates a 'hundred-year flood' in memory supply, according to CEO Tim Cook.
Morgan Stanley maintained its Overweight rating but lowered its price target to $360 from $364, warning of supply, margin, and Services headwinds. The bank believes Apple could offset some pressure through expected iPhone price increases later this year and the launch of a foldable iPhone.
Services revenue grew 12% year over year, missing Wall Street estimates, while September-quarter guidance implies growth will slow to below 10%, hurt by foreign exchange, weaker mobile gaming, and softer App Store trends.