Apple will soar 15% higher as work-from-home demand drives record sales, Morgan Stanley says

• Morgan Stanley raised its price target for Apple stock to $152 from $144 on Thursday, implying a 15.1% surge from Wednesday's close over the next 12 months.
• The bank's analysts expect the iPhone 12 lineup to revive handset sales and drive record quarterly profits and revenue.
• Prolonged work-from-home activity will support Apple's Mac, iPad, and Services sales, the team added.
• Watch Apple trade live here.

Record December-quarter sales are set to kick off a hugely positive year for Apple, Morgan Stanley said Thursday.

Analysts led by Katy Huberty lifted their price target for the iPhone maker's shares to $152 from $144, implying a 15.1% climb from Wednesday's close over the next 12 months. The team reiterated its "overweight" rating on the stock and views the tech sector as "attractive" over the next year.

Morgan Stanley expects Apple's revenue and profits to hit all-time highs in the fiscal first-quarter report, despite more conservative forecasts from investors. The bank projects double-digit revenue growth across all five segments. Early indicators point to above-consensus iPhone and Services revenues, and recent market trends stand to amplify a post-earnings pop, the team said in a note to clients.

"Given positioning into the quarter is muted after the rotation out of high-quality stocks over the past several months, we expect strong follow-through post-earnings and are buyers into the print," they added.

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Apple gained as much as 3.3% on Thursday. Tech stocks have led indexes higher in recent sessions after Netflix's fourth-quarter earnings blew estimates out of the water.

Past earnings reports from Apple showed investments in its Services and Wearables businesses offsetting slowing iPhone sales. Yet the iPhone 12 lineup unveiled in late 2020 should reinvigorate handset revenue, Morgan Stanley said.

The 5G-capable iPhones were Apple's most successful product launch in five years, and demand continues to outstrip supply despite 78 million forecasted shipments in the December quarter, according to the team. Both Morgan Stanley's fiscal first-quarter and full-year projections for iPhone shipments exceed the consensus forecast.

Elsewhere in the lineup, the analysts see prolonged work-from-home and remote-learning activity propping up Mac, iPad, and Wearables revenues. Consumer survey data suggests computer and consumer electronic sales hit nine-month highs in the previous quarter as renewed COVID-19 lockdowns forced more people to stay home.

Though the data isn't specific to Apple, "we believe they served as strong tailwinds" for the company's computers and tablets, the team said.

Apple traded at $135.70 as of 11:40 a.m. ET Thursday, up 2.3% year-to-date. The tech giant has 71 "buy" ratings, 15 "hold" ratings, and three "sell" ratings from analysts.

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