Concerns about iPhone 16 lead times could send Apple shares lower in the near term, according to Morgan Stanley. While the investment bank notes that lead times have doubled since last Friday, they are still shorter year over year, which could increase the likelihood of negative iPhone build revisions and stock underperformance, by extension. Analyst Erik Woodring notes that in the past five December quarters where lower build revisions have taken place, earnings per share revisions for the December quarter have also been revised lower by 1.7% on average. This has led to the stock underperforming by an average of five points in the three months following an iPhone launch. “What will matter most over the next 10 days is the trajectory of iPhone 16 lead times, as historically iPhone lead times elongate through the first in-store availability date (Friday, September 20th) before gradually trending lower in the weeks thereafter,” the analyst wrote in a Wednesday note to clients. “Therefore, a more sustained elongation in iPhone 16 lead times from today should be viewed positively, while a sharp reversal in iPhone 16 lead times after Friday would likely indicate a greater risk of negative iPhone build revisions.” AAPL YTD mountain AAPL, year-to-date Apple shares have risen nearly 14% this year, and at current trading levels, Woodring sees the stock having near-term downside support of $197. This implies more than 9% downside from Tuesday’s close. With that in mind, the analyst said investors should buy the stock on any possible cuts to estimates. That is because artificial intelligence-driven multiyear upgrades are “a when, not an if” in his view. “Given most bulls (including ourselves) see FY26 and the iPhone 17 as the bigger cycle — with near-term iPhone 16 lead time data having very little influence on that thesis — we believe that any estimate cuts or near-term stock underperformance will likely get bought, leading to just a short window of underperformance before investors turn their attention to the iPhone 17 and FY26 earnings power,” he said. As a result, Woodring has an overweight rating on the stock and a price target of $273, which implies about 26% upside. He has also named Apple as a top pick. That aligns with Wall Street’s largely bullish view. With 48 analysts covering the stock, 36 of them have a strong buy or buy rating, while 11 are neutral. Its average target is $240.58, implying about 11% upside. The stock also currently has a forward price-to-earnings ratio of about 32.7, per FactSet.
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