Morgan Stanley’s Katy Huberty is another analyst not buying into Apple’s (NASDAQ:AAPL) bear trend continuing much longer. According to the analyst, issues of product supplies as well as gross margins — two of the main causes of investor concern — will be sorted out soon and lead to a surge in sales in the first quarter of the next calendar year, if not in this three-month period.
“Our Asia supply chain meetings point to potential momentum behind several key Apple debates,” Huberty wrote in a note to clients on Thursday. “Namely, iPhone and iPad mini sales are surprising to the upside, China Mobile (NYSE:CHL) remains a likely 2H13 catalyst, and component costs will fall in 2013 boosting margins.”
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Huberty said key suppliers for both the iPhone as well as the iPad had signaled that they expected their own current-quarter revenue to be higher than anticipated on increased demand. Orders from Apple have also been above average for next year’s first quarter. While average Wall Street shipment expectations stand at 46 million iPhones and 23 million iPads for this quarter and 43 million iPhones and 19 million iPads next quarter, Huberty thinks those numbers could get higher. In addition, component prices were likely to drop, leading to higher profit margins for Apple. The analyst also sees the growing markets of China and Brazil playing a key role in raising demand for Apple’s products.
Huberty reiterated an Overweight rating on the company’s shares and a $714 price target.
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