Morgan Stanley analysts weighed in today on tech giant Apple Inc. (NASDAQ:AAPL) and entertainment firm Walt Disney Co (NYSE:DIS), as Apple’s March iPhone demand is ahead of expectations, while Walt Disney’s suffered from lower than expected cable network affiliate revenue growth in F1Q16.
In a research report issued Tuesday, Morgan Stanley analyst Kathryn Huberty reiterated an Overweight rating on shares of Apple, with a price target of $135, after the analyst released her latest AlphaWise iPhone tracker survey which indicates that 56.5 million units demand for C1Q with China delivering the strongest growth.
Huberty wrote, “Extrapolating data through end of February implies demand for 56.5M iPhones for the quarter.This is far ahead of our estimate of 49M and management comments on the last earnings call that indicated they expect at least 52M units. Apple exited last quarter “slightly above” the low-end of its 5-7 week iPhone channel inventory target. Any inventory fill for Apple’s indirect distribution channels would put further upward pressure on estimates.Every 1M iPhone shipments add $640M of revenue and $0.04 of EPS to our March quarter estimates of $50.9B and $1.94 (cons. $52.1B and $1.99).”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Kathryn Huberty has a total average return of 16% and a 61.7% success rate. Huberty has a 20.5% average return when recommending AAPL, and is ranked #79 out of 3726 analysts.
Out of the 52 analysts polled by TipRanks, 38 rate Apple stock a Buy, 11 rate the stock a Hold and 3 recommend a Sell. With a return potential of 31%, the stock’s consensus target price stands at $137.45.
Walt Disney Co
In addition, Morgan Stanley’s Benjamin Swinburne reiterated an Equal Weight rating on shares of Walt Disney, with a price target of $100, which represents a slight upside potential from current levels.
Swinburne wrote, “While ESPN is undoubtedly one of the most popular cable networks in the bundle, our long-term view is that ecosystem shifts – in consumer behavior and distributor packaging- will reduce the distribution levels of ALL fully distributed cable networks. As a result, despite ESPN’s unmatched popularity among sports-hungry households, its fixed and long duration cost structure puts it at a relative disadvantage versus other networks with respect to its ability to sustain EBIT growth. We believe consensus estimates flatly miss this risk, which in our view became clear in the F1Q results reported in February.”
“We have focused our cable network research over the last year on subscriber erosion, but pricing growth is also under pressure from consolidating MVPDs and negative mix shift. On that front, our lowered estimates today reflect a reduction in assumed pricing growth, rather than greater sub losses,” the analyst added.
According to TipRanks.com, analyst Benjamin Swinburne has a total average return of 11% and a 63.5% success rate. Swinburne has a 1% average return when recommending DIS, and is ranked #348 out of 3726 analysts.