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Apple's iPhone Business Doing Great in China: Morgan Stanley

'We believe iPhone is outperforming expectations in China,' wrote Morgan Stanley analyst Katy Huberty.
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Apple’s  (AAPL) - Get Apple Inc. Report iPhone business in China received a positive assessment on Friday from Morgan Stanley analyst Katy Huberty, who has an overweight rating and a $144 target price on the stock.

“We believe iPhone is outperforming expectations in China, as data through the end of November points to year-over-year iPhone shipment growth and share gains in China,” Huberty wrote in a commentary.

“With stable builds, positive supply chain data and extended iPhone 12 lead times, we are increasingly bullish on the current cycle. Fears of iPhone weakness in China are misguided," she added.

Huberty says Morgan Stanley has recently received “questions about China smartphone weakness and its impact on iPhone 12 sales, especially after Apple posted 29% Y/Y revenue declines in China during the September quarter.”

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But she noted “we believe Apple is actually outperforming in China, with iPhone units up double digits Y/Y in the quarter to date through November, driving a period of smartphone installed base share gains not seen in China since mid-2019."

Outside of China, “the rest of our iPhone checks continue to support our above-consensus FY21 iPhone forecast,” Huberty wrote. “As of Tuesday, Dec. 15, iPhone 12 Pro lead times in the U.S. remained extended at three to four weeks vs. one to two days for all prior iPhone models over the last four years at 60 days after launch.”

Huberty’s report didn’t do much for Apple’s share price. It recently stood at $127.53, down 0.91%. To be sure, however, the stock has soared 74% year to date, as consumers have flocked to Apple products during the Covid pandemic.

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