Morgan Stanley analyst Katy Huberty sent out a notice to clients on Thursday that her meetings in Asia with companies along Apple's supply chain showed that sales of the Apple iPhone 5
and Apple iPad mini
are stronger than anticipated. Wall Street estimates the Cupertino based firm will sell 46 million units of the Apple iPhone and 23 million Apple iPad tablets in the current quarter, figures which Huberty sees Apple topping
. She also sees Apple beating estimates for the quarter ended in March 2013 which currently stand at 43 million handsets and 19 million tablets.
The analyst says that earlier problems producing the new in-cell touch panels have been cleared up. Yields are in the 70% to 80% area for the part. Morgan Stanley has a buy rating on the stock with a $714 price target
and recommends an "overweight" position in the stock, which it sees rising as high as $980 in the next 12 months.
Morgan Stanley's analysis of the stock shows the difference between fundamental and technical stock analysis. The former, which was used by the brokerage firm for its report, uses things like supply chain analysis to determine how much money Apple will earn in the next few quarters and then slaps an arbitrary P/E ratio to the earnings per share estimate to determine if the stock is cheap or dear. The problem with this form of analysis is that no one can predict exactly how many Apple iPhone units will be sold at any given time. Additionally, no one can determine what a firm's P/E ratio should be.
Technical analysis, which uses charts, is based on the idea that knowing the past can help predict the future. Most technicians are bearish on Apple because of the stock's recent penetration of the 200 day moving average
. Technical analysts will also point out that this is why good news, like a bullish report from Morgan Stanley, didn't move the stock higher on Thursday. Apple closed at $525.62 for a loss of $11.26 and the stock is down 25%
since trading at its 52 week high of $705 set the day that the Apple iPhone 5 launched.