Will These Catalysts Save Apple?

Morgan Stanley took Apple (NASDAQ:AAPL) off its “Best Ideas” for investors list after the company announced earnings that clearly failed to impress its investors. Analyst Katy Huberty didn’t see the quarterly results as all negative, though, and called Apple’s medium-term risk reward an attractive option for investors. She reiterated an Overweight rating and a $630 price target on the stock.

While near-term catalysts for the company were limited, Huberty said sparks would arrive starting in the June quarter, including an anticipated iPhone refresh, new iPads, and broadened wireless carrier partnerships.

The company announced that profit in the holiday quarter rose less than 1 percent to $13.1 billion, or $13.81 a share. Revenue rose to $54.5 billion from $46.3 billion.

“The $8 billion revenue increase year-over-year is impressive, especially with Mac and iPad mini supply limiting revenues, but the stock likely needs to get past the tough gross margin and iPhone channel inventory comps in March to get back on a positive earnings and stock performance trajectory,” Huberty wrote in a note to clients.

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According to the analyst, catalysts will begin arriving for Apple in the June quarter with an iPhone launch in the summer, which could include a lower-priced version similar to the iPad mini. Then there were likely to be new iPads, including an iPad mini with Retina display around mid-year. Huberty also predicted expanded carrier partnerships with T-Mobile in the U.S., NTT Docomo (NYSE:DCM) in Japan, and China Mobile (NYSE:CHL) in the second half of the year.

She also believed that a share repurchase was due, noting that every $5 billion in share buyback conducted by Apple was expected to reduce the share count by 1 percent.

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