Apple target lifted at Morgan Stanley on stronger-than-expected iPhone 17 cycle

Morgan Stanley has raised its price target for Overweight-rated Apple (AAPL) shares to $298 from $240, citing a stronger-than-expected iPhone 17 cycle with a positive bias to future estimates. The firm increased its fiscal 2026 iPhone revenue forecast by 4% due to higher units and average selling prices, anticipating high-single-digit year-over-year iPhone revenue growth into FY27, driven by an aged installed base and upcoming innovations like a Foldable iPhone. Consequently, Morgan Stanley also lifted its FY26 and FY27 EPS estimates by 2% and 6% respectively, with a bull case target of $376 predicated on robust demand from Foldables and AI.

Analysis

Morgan Stanley has materially increased its price target for Apple to $298 from $240, reinforcing its Overweight rating based on a stronger-than-anticipated iPhone 17 cycle. The bank's revised forecast includes a 4% increase to fiscal 2026 iPhone revenue, driven by a 3% rise in unit shipments and a 1% lift in average selling prices (ASPs), signaling an imminent production build increase. This optimism is predicated on a large, aging installed base due for an upgrade, coupled with significant product innovation including a potential first-ever foldable iPhone and six new models. Consequently, Morgan Stanley projects high-single-digit year-over-year iPhone revenue growth extending into FY27, a model that does not yet factor in potential upside from AI. The target price of $298 is derived from a 32x multiple on a new FY27 EPS estimate of $9.30, which is 6% above consensus, while a bull case target of $376 is presented, contingent on AI and foldables catalyzing demand to over 270 million units and $10.16 in EPS.

Key Decisions for Investors

• Investors should view Morgan Stanley's upgraded forecasts as a strong validation of Apple's multi-year product cycle, potentially justifying a bullish stance on the stock's medium-term outlook.
• Monitor upcoming company reports and supply chain data for confirmation of the key catalysts, specifically the acceleration of the upgrade cycle and any official news on the development of a foldable iPhone.
• Consider the valuation context, as the $298 target implies a 32x multiple on FY27 earnings, a premium that hinges on the successful execution of the anticipated product roadmap.
• Evaluate the bull case scenario of $376, as the potential for AI and foldable devices to act as major demand catalysts represents significant upside beyond the base forecast and could influence long-term position sizing.