One firm raises its price target on Apple shares, two tales of Apple manufacturing in India, and three countries get better Apple Maps.
Morgan Stanley Ups AAPL Price Target to $180
Here’s one you don’t hear that much these days: A financial firm has raised its 12-month price target on Apple shares. Apple 3.0 ran part of a note from Morgan Stanley analyst Erik Woodring, which was also written up by AppleInsider. Basically — the near-term for Apple looks weak, but past that it’s sunshine and lollipops. “In the near-term,” reads the note:
…weaker consumer electronics spending, a challenging macro backdrop, FX headwinds, iPhone production shortages, and lingering COVID restrictions are headwinds that are likely to result in Apple’s first fiscal year of revenue and EPS declines since 2019.
After that, cue the sun. Quoting his note again:
…if we look beyond the near-term, we see a catalyst- rich event path over the next 12 months that is underappreciated by investors, including reaccelerating iPhone and Services growth, record gross margins, two new product launches, and the potential introduction of an iPhone subscription program.
If that “iPhone subscription program” talk sounds familiar, it should. It figured into Morgan Stanley’s note a little over a week ago listing “5 idiosyncratic tailwinds” that should push Apple in the next six-months to nine-months. Those included:
- “Re-accelerating” growth for Apple Services
- “Pent up demand” for the iPhone 15
- An Apple AR headset
- A Possible hardware subscription service
- “Underappreciated” gross margin
If that sounds familiar, it should. It seems they’re the same list, though the later list is delivered with stronger conviction. Woodring’s really into the hardware subscription idea, though. Quoting his most recent note again:
What gets us most excited as an Apple analyst today is the business model transformation Apple is undergoing, shifting toward a model focused on installed base monetization rather than unit growth, which in our view, increasingly argues for a valuation more commensurate of a subscription-like business [instead of a technology platform.]
Factored in as part of a “bull case valuation,” if Apple launched a hardware subscription plan, Morgan Stanley could see a case for AAPL at $230. On this planet, where Woodring and friends are still waiting for the five catalysts, the target’s a bit more grounded.
Reiterating his firm’s call making Apple the Top Pick for 2023, Woodring maintains an “Outperform” rating on Apple shares. He’s upped his price target on the shares from $175 to $180.
Reports from Bloomberg and WSJ on Apple Manufacturing Moves in India
Huge if true: A piece from Bloomberg (via Apple News) has Foxconn spending $700 million on a 300-acre facility in Bengaluru, India — part of Apple’s continuing plans to shift at least some manufacturing out of China. Secret people said to know something about something say the plant will make parts for iPhones. Additionally, the piece says:
The factory may also assemble Apple’s handsets, some of the people said, and Foxconn may also use the site to produce some parts for its nascent electric vehicle business.
I kind of wish we knew who the “its” in that sentence referred to. While Apple is rumored/believed to be eyeing some sort of car at some point, Foxconn actually has a “nascent electric vehicle business.”
Assuming the secret so-and-sos actually do know something, the Foxconn move is kind of massive. Bloomberg says the Bengaluru location would create somewhere in the neighborhood of 100,000 jobs. Right now, the piece says, Foxconn’s “iPhone City” plant in Zhengzhou supports about 200,000, though that number fluctuates seasonally.
In a bit of a Tenet moment, Bloomberg says a couple of officials in the Indian government “tweeted confirmation of details around the upcoming plant…” The weird part though — one of those tweets included a link to the Bloomberg article. The Bloomberg article had been updated to include the tweeted confirmation. Still… felt dangerously close to tearing a hole in the fabric of space and time.
Despite the apparent confirmation from Indian officials, Bloomberg says the plans “could still change as Foxconn is in the process of finalizing investment and project details…”
Huge If True II
A piece from the Wall Street Journal (via Apple Stocks) says “Foxconn is set to expand production of iPhones at its existing plant near Chennai, in the southern Indian state of Tamil Nadu,” part of Apple’s continuing plans to shift at least some manufacturing out of China.
I nearly missed this one, assuming it was the Journal picking up the Bloomberg piece, though not so. While the Journal does mention the potential plant in Bengaluru, the Tamil Nadu talk is iPhone specific. Quoting the Journal:
[Foxconn] aims to boost iPhone production to around 20 million units annually by 2024 and roughly triple the number of workers to as many as 100,000…
Just like the Bloomberg piece, the Journal’s relies on secret people, “including a senior Indian government official.” And just like the Bloomberg piece, the Journal says “Foxconn’s expansion plans are under consideration and could change.”
Surprising no one, Apple did not offer comment for the Bloomberg report, nor for the Journal. While Foxconn Chairman Young Liu did comment, his comment was general — addressing his trip to India, not plans for specific plants. After meeting last week with Indian Prime Minister Narendra Modi, Young Liu issued a statement, saying:
My trip this week supported Foxconn’s efforts to deepen partnerships, meet old friends and make new ones, and seek cooperation in new areas such as semiconductor development and electric vehicles… Foxconn will continue to communicate with local governments to seek the most beneficial development opportunities for the company and all stakeholders.
Report: Michael Abbott, VP of Cloud Engineering, Leaving Apple
Apple is apparently losing one of its cloud minders. MacRumors highlights a report from Bloomberg‘s Mark Gurman that says Michael Abbott, Apple VP of cloud engineering, is leaving the big round building next month.
Far from a lifer, the piece says “Abbott joined Apple in 2018,” having served as a tech exec at such companies as Twitter, Microsoft, and Palm. Not that he’s no one at Apple. According to the piece, “Abbott oversees Apple’s cloud infrastructure for services like iCloud, iMessage, FaceTime, and others.” Gurman says “Jeff Robbin, a longtime Apple engineering VP known as the creator of iTunes,” will take over Abbott’s position.
Improved Apple Maps Now Cover Finland, Norway, and Sweden
Better Apple Maps for more of the planet. A piece from iDownloadBlog says Apple’s improved Maps have gone live for Finland, Norway, and Sweden. Improvements listed in the piece include:
- 3D landmarks
- Indoor maps at airports
- Natural language guidance
- More detailed roads and parks
- Faster, more accurate navigation
- More accurate location information
- Look Around (Apple Maps answer to Google Street View)
- Turn-by-turn walking directions in augmented reality
Users wanting to take advantage don’t have to do anything except open Apple Maps. iDownloadBlog says the changes are server-side, so no download or update is required.
Depth and Water Seal Testing Available for Apple Watch Ultra
An interesting support offering for Apple Watch Ultra. MacRumors points us to a new support doc on Apple’s site, announcing the availability of Depth and Water Seal Testing for Apple’s rough and tumble chronometer.
Honestly, it seemed like a service for the paranoid at first, though the doc points out a couple of good reasons why one might want to have the thing tested. According to Apple:
You might want to send your Apple Watch Ultra for a Depth and Water Seal Test if:
- You’d like to check the functionality of the depth gauge in your Apple Watch Ultra.
- You might have caused unseen damage to your Apple Watch Ultra — for example, by crashing while bicycling, or hitting your watch on a rock during a hike.
Getting the thing tested is kind of a dicey proposition. According to MacRumors:
Users are cautioned that unseen damage could compromise the watch and that the Depth and Seal Water Test could render the device inoperable in such situations, necessitating a replacement fee unless the issue is covered by warranty.
Kind of dicey, as I say. Then again, diving with a defective Apple Watch Ultra could be worse.
Tests can be requested through Apple’s site. No word in the support doc on whether there is a cost associated with such a test. The company says it will have your watch (or your replacement watch) back to you in roughy seven to ten business days.
Apple’s MLS Push Continues with Recap Show and Documentary Content
And finally today, Apple wants you to want soccer so much. One of the offerings in MLS Season Pass on Apple TV is a show called “MLS 360.” 9to5Mac says the hosted show features highlights from all of the Major League Soccer games on a given day. And now, the piece says, that show is free to Apple TV+ subscribers. “For week one,” 9to5Mac says, “‘MLS 360’ was (…) behind the Season Pass Paywall. But for week two onwards, that is no longer the case.”
The move makes sense. “Presumably,” the piece says:
…this move represents a strategic bet from Apple that they will be able to convert more TV+ viewers into Season Pass members, if they give them slightly more access upfront…
There is also talk of an MLS documentary for Apple TV+, though details on that are a bit sketchy. A piece from The Atlantic says:
Major League Soccer has partnered with British production house Box to Box Films to produce content and possibly a documentary about the league…
Box to Box is the production company behind the F1 docuseries “Drive to Survive,” which 9to5Mac says “is widely credited as being factor for the growth in F1 fanbase over the last few years.” The news is official, having been given to The Atlantic by MLS deputy commissioner Gary Stevenson, though plans are vague at the moment. “While the collaboration is still in its early stages,” The Atlantic says:
…the content will likely air on Apple TV — MLS’s new broadcast partner — and potentially on the league’s website, social channels and YouTube.
(…)
A documentary about MLS similar to “Drive to Survive” is possible and has been discussed, but specifics have not been finalized.
Today on The Mac Observer’s Daily Observations Podcast
TMO Managing Editor Jeff Butts and I talk over the Apple/Indian manufacturing stories. Plus: Apple’s plans to grow MLS interest and a side trip to an Apple Store. That’s all today on the Daily Observations Podcast from The Mac Observer.