Here Comes The iPhone ‘Supercycle’

Apple shares are already at an all-time high, but this analyst sees plenty of gains still to come.

Analysts and investors are getting more and more excited about this year’s iPhone launch. The announcement isn’t expected until September, but the 10th anniversary edition of the iPhone is already getting more hype than any model since the iPhone 6 in 2014, when Apple debuted its larger screen models. The rumor mill is buzzing about new features like fancy OLED displays, an edge-to-edge display, and a better battery. Morgan Stanley says the new phone could drive a “supercycle” of upgrades.

It’s worth noting that Apple shares rose 50% in the year leading up to the September 2014 release of the iPhone 6 and 6 Plus.

On Tuesday, analysts at Morgan Stanley bumped their price target on Apple to $154, from $150. The firm thinks Apple could ship 260 million iPhones next fiscal year, which runs from September 2017 to September 2018. That forecast is more optimistic than the Wall Street average, which currently sees Apple selling 241 million iPhones. If Morgan Stanley is right, it would mean Apple investors are not yet fully recognizing the financial benefits of the iPhone X, as some are calling the next phone.

Some of the upside could come from better-than-expected demand from China, Morgan Stanley says. “Counter to market belief our analysis suggests Apple is positioned to take net users from local Chinese smartphone brands,” Morgan Stanley’s Katy Huberty wrote on Tuesday. “We believe consensus estimates and share price will rise over the next six months to better reflect bullish supply chain data points and the China opportunity.”

In a best-case scenario, Morgan Stanley sees Apple shares rising as high as $190. That’s what the firm refers to as its “bull case.”

On Tuesday morning, Apple shares were up 0.4% to $136.25.

Big Picture: Apple shares are rallying as investors try to grasp the benefits of the 10th anniversary iPhone, due out in September.