Apple (NASDAQ:AAPL) iPhone revenue will grow year-on-year in FY24, according to Morgan Stanley in a note Thursday.
The analysts, who maintained an Overweight rating and $215 price target on the tech giant's shares, said despite concerns about a muted iPhone 15 cycle, they believe iPhone revenue will increase due to a growing installed base, easy year-over-year comps, pent-up demand, and a positive mix shift driving ASP growth.
"iPhone pricing will be the most important detail at Apple's Sept 12th event," said the analysts. "While the iPhone event has historically been a 'sell-the-news' event, we continue to see upside to Consensus and buyside expectations as FY24 tailwinds outweigh the headwinds."
They laid out several reasons they believe iPhone revenue will grow in FY24, including the fact it forecasts 4% Y/Y growth in Apple's primary, active installed base in FY24, Apple facing easy Y/Y compares, the pent-up demand from consumers deferring their iPhone purchase from FY23, a slight form factor change, emerging markets being an underappreciated tailwind, the continued positive mix shift to Apple's higher-end SKUs, and targeted pricing increases at the high-end of the portfolio.
"We believe that as FY24 iPhone expectations move higher, Apple can continue to outperform, as positive estimate revisions offset very moderate multiple compression," said the Morgan Stanley analysts.
"We don't believe investors need to be aggressive into next week's event, but we'd be buyers on any material underperformance post-launch," they concluded.