If history is any guide, expect a positive setup for Apple shares should the company raise expectations for the September quarter when it reports earnings Aug. 3, Morgan Stanley said. Analyst Erik Woodring expects the iPhone maker to report an in-line June quarter but revise guidance upward — after five consecutive quarters of Apple guiding forward consensus estimates lower — due to improving iPhone trends, seasonal computer strengths and cyclical tailwinds. “History shows that this kind of setup drives the greatest outperformance in Apple’s stock in the day, week and month post-earnings, with Apple outperforming the S & P 500 by 10 points, on average, in the month after raising September quarter guidance over the last decade,” Woodring wrote. “History would show that June quarter earnings is a positive stock catalyst for Apple, and Sept quarter guidance matters most for Apple’s stock,” he added. Apple has beaten June earnings estimates every time in the last decade by 9% on average, and Morgan Stanley expects the company to do it again. Management has also revised revenue and EPS guidance higher in seven instances. When revisions come in ahead of consensus, the stock outperforms the S & P 500 by 5 to 10 points within the day, week and month that follow. “With our September quarter revenue and EPS 4-9% above current Consensus, and a shade above buyside expectations, we expect earnings to be a positive catalyst for Apple shares next week,” Woodring said. AAPL YTD mountain Share performance in 2023 Overall, Morgan Stanley remains bullish on Apple heading into the print, viewing it as a top pick. Woodring reiterated his overweight rating and $220 price target, reflecting 14% upside from Monday’s close. While the firm is bracing for “stable but subdued demand” against difficult comparisons from a year ago, the Wall Street bank expects upside to services and Mac revenue over Street expectations. Apple shares have rallied nearly 49% since the start of 2023. — CNBC’s Michael Bloom contributed reporting.
