For Apple, Good News Out Of China Keeps Morgan Stanley's Bullish Stance Intact

While multiple reports suggest Apple Inc. AAPL is losing market share in China, analysts at Morgan Stanley argue otherwise.

The Analyst

Morgan Stanley's Katy Huberty maintains an Overweight rating on Apple's stock with an unchanged $200 price target.

The Thesis

Morgan Stanley's "AlphaWise" team continues to closely monitor Apple's iPhone share gains and losses in China with a focus on market share trends, Huberty said in a Wednesday note. (See the analyst's track record here.) 

The latest report found that Apple continued to gain market share in China through the four-week period ending Dec. 17.

Apple's market share of active smartphones in China rose 250 basis points to 21.3 percent during the four-week period, Huberty said. Morgan Stanley's data shows that iPhone X adoption in the country is ramping faster than the iPhone 8 and iPhone 8 Plus. The iPhone X captured 1.64 percent of the Apple active user base compared to 1.32 percent for the iPhone 8 Plus and 0.65 percent for the iPhone 8, Huberty said. 

When adjusting the data for total selling days — the iPhone X was only available for 72 days versus the iPhone 8 and 8 Plus for 97 days — the iPhone X gained 3.7 basis points of share in the Apple active user base per day through Dec. 19 versus 2.3 basis points for the iPhone 8 Plus and 1.1 basis points for the iPhone 8 in the comparable time period.

"Given these strong and accelerating data points for the iPhone, and iPhone X in particular, we remain confident in our thesis that Apple is turning the corner in China and growth will accelerate in the quarters to come," Huberty said. 

Price Action

Shares of Apple were trading lower by 0.3 percent at $175.54 early Wednesday morning after hitting a new all-time high of $179.39 on Tuesday.

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Photo courtesy of Apple.