Morgan Stanley Raises Apple Price Target On iPhone Trade-In Opportunity

Improving adoption of Apple Inc’s AAPL iPhone trade-in programs creates a sustainable competitive advantage for the company, according to Morgan Stanley.

The Apple Analyst: Katy Huberty maintained an Overweight rating on Apple and raised the price target from $340 to $419.

The Apple Thesis: The iPhone trade-in programs can unlock $147 billion of value and fund one-third of iPhone purchases over the next three years, according to Morgan Stanley’s AlphaWise consumer survey, Huberty said in a Monday note. (See her track record here.)

Although 48% of consumers now capitalize on trade-in programs, the latest AlphaWise consumer device sustainability survey of 10,000 consumers across the U.S., U.K., Germany, China and India shows that adoption is rising, the analyst said. 

If adoption rises to 77%, as implied by the AlphaWise survey, affordability will improve by at least 10% over the next five years, boosting iPhone shipments by 6% in 2021 and by 3% in 2022, Huberty said.

Increased adoption and value of trade-ins could accelerate 5G upgrades, the analyst ssaid. 

The affordability of the iPhone will also improve significantly, “as recent reports suggest Apple 5G iPhone prices won't change materially from their 4G predecessors while competitors are raising prices,” according to Morgan Stanley. 

AAPL Price Action: Shares of Apple were trading 3.57% higher at $397.38 at the time of publication. 

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Photo courtesy of Apple.