Apple (AAPL) shares dropped 2.5% on April 21 after it revealed its greatest information for a few years. Its present CEO, Tim Prepare dinner, will step down from the place and get replaced by John Ternus, the agency’s senior vice chairman of {hardware} engineering.
Subsequent week, the iPhone maker will report its fiscal second-quarter earnings on April 30. This is likely one of the few earnings left with Prepare dinner below the CEO place earlier than he leaves on September 1.
Management change is often dealt with rigorously as a result of it will possibly fear traders. The timing of this announcement hints that Apple might have constructive information to supply.
“My intestine tells me this was introduced earlier than earnings so we will deal with an awesome quarter with sturdy fundamentals subsequent week when Apple stories,” Melius’s head of know-how analysis Ben Reitzes wrote in a analysis notice, CNBC reported. “Prepare dinner was CEO a very long time and certain needs to go away on a excessive notice.”
Within the upcoming earnings, Traders are weighing regular demand throughout iPhone and different gadgets in opposition to rising value pressures, particularly in reminiscence elements, which might squeeze margins within the close to time period.
In January, Apple reported excessively sturdy gross sales of the iPhone, significantly in China. Income from iPhone surged 23% yr over yr to $85.27 billion, pushed by sturdy gross sales of the iPhone 17 fashions. iPhone gross sales account for almost 60% of Apple’s complete income.
Within the January earnings name, CEO Prepare dinner acknowledged that the rising chip costs can have a “bit extra of an impression” on the corporate’s Q2 gross margin. Nonetheless, Apple forecast a gross margin of 48% to 49%.
Morgan Stanley is revisiting Apple inventory forward of earnings. Right here’s what the agency sees.
Morgan Stanley reiterated its $315 worth goal with an obese ranking on Apple, arguing that the iPhone maker is “a tactical lengthy into earnings” and the near-term margin strain is already effectively understood by traders.
“Reminiscence inflation will strain margins, however that is well-known,” the analysts wrote in an April 20 analysis report despatched to TheStreet. “We count on gross margin draw back to be greater than offset by income upside within the June quarter information, making for better-than-feared earnings.”
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Nonetheless, Morgan Stanley expects Apple’s June quarter (fiscal Q3) gross margin to come back in beneath consensus, “given issues about reminiscence worth inflation.”
Past that, the agency additionally sees dangers from weaker demand if greater iPhone costs or macro situations weigh on customers, in addition to potential volatility tied to the staggered iPhone launch schedule, which might have an effect on income and margin timing.
On the income aspect, Morgan Stanley sees continued power in Apple’s core enterprise, the iPhone.
“We proceed to see sturdy iPhone promote by way of in March, above-seasonal builds in June, and a considerably above-Consensus CY26 iPhone construct forecast from the provide chain,” the analysts stated.
Morgan Stanley stated sturdy iPhone gross sales, together with upside in Mac and providers, are driving the agency to modestly elevate its March and June quarter income forecasts to about 1% to five% above consensus estimates.
Past the quarter, consideration turns to catalysts.
Morgan Stanley stated two catalysts might make the upcoming earnings a “clearing occasion” and drive stronger efficiency for Apple.
The primary is Apple’s June Worldwide Builders Convention, the place expectations are low, however that would work in Apple’s favor. The agency highlighted that “a significant Siri redesign could possibly be a significant sentiment tailwind.”
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The second is the September iPhone launch. Morgan Stanley expects “a brand new iPhone launch this fall that brings real new product pleasure,” which might assist drive renewed investor curiosity.
The financial institution additionally pointed to Apple’s money stage as a assist issue, noting its “strong FCF era stands out positively,” whereas different mega-cap tech firms are ramping up spending on AI infrastructure.
Relating to Apple’s CEO change, Morgan Stanley stated it’s “unlikely to change Apple’s core technique/imaginative and prescient throughout {hardware}, providers, software program, capital returns, or vertical integration.
“With a CEO transition, we will envision some renewed investor optimism,” the analysts wrote in one other analysis notice the place they didn’t change their $315 worth goal for Apple. “Fundamentals are strong.”
Apple inventory closed at $266.17 on April 21 and is down 2.1% yr to this point.
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This story was initially printed by TheStreet on Apr 22, 2026, the place it first appeared within the Investing part. Add TheStreet as a Most well-liked Supply by clicking right here.
