India will likely be a significant contributor to Apple's revenue and installed base growth over the next five years, Morgan Stanley analysts said in a Monday note, citing Apple's manufacturing investments in India and the country's "economic boom."
The note also reflected a new price target increase influenced by India, from $190 to $220, with a bull case valuation increase to $270. Morgan Stanley reaffirmed Apple + as their top recommendation.
Analysts at Morgan Stanley predict that China will account for 15% of Apple's revenue growth over the next five years, compared to 2% over the past five years and $6 billion today, and 20% of the company's installed base growth.
Morgan Stanley predicts that Apple's revenue will increase by $40 billion over the next ten years, which is "equivalent to the introduction of an entirely new product category."
In their assessment, the analysts cite a number of factors, including India's increased electrification and Apple's efforts to establish a manufacturing and retail presence in the country. According to a survey commissioned by Morgan Stanley, the desire and ability of Indian consumers to purchase iPhones has increased.
Analysts did add a caveat, cautioning that if India fails to meet its economic and demographic growth targets, "we wouldn't expect Apple to be as significant of a beneficiary in India."
The fundamental thesis of Morgan Stanley, however, is favourable. "This means that India will be just as important to Apple's growth algorithm over the next 5+ years as China was over the last 5 years," the analysts said. "We believe the market undervalues this fact at the moment."
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