Investing.com – As Apple (NASDAQ:AAPL) sank 8% in the pre-market after reporting the first-ever drop in iPhone sales, experts at Morgan Stanley took note of the disappointing earnings and still recommended the shares on Wednesday with a price target showing 20% upside.
Morgan Stanley did not deny that earnings were disappointing, but still repeated their recommendation to “overweight” the tech company given that it “sets up better heading into iPhone 7 launch”.
The investment bank said that the March quarter missed expectations “on macro headwinds, slower upgrade cycle and early iPhone channel inventory reduction.”
In this regard, Morgan Stanley did reduce its fiscal year earnings-per-share estimate by $1.13 to $8.00.
However, these analysts asserted that the “June quarter guidance is not as bad as first feared”.
And while they cut their price target from $135 to $120, the number still provides more than 20% upside to today’s current pre-market price below $100.
“While shares may take a pause near-term, we like the set-up of a lower bar heading into easier compares and product cycles in the second half of fiscal 2016”, they concluded.