- Morgan Stanley believes Apple stock is looking bullish as China slowly recovers from a coronavirus-induced lockdown.
- The sudden deterioration in China’s air quality suggests industrial production is ramping up again–and that includes Apple’s factories across the mainland.
- Apple’s share price rose more than 3% Wednesday but continues to trade well below its February peak.
On a day when much of the world was celebrating Earth Day, Apple (NASDAQ:AAPL) investors should be rejoicing at the sudden deterioration in China’s air quality.
According to Morgan Stanley, the massive smog clouds engulfing the country is a bullish sign that Apple’s factories are humming again as China’s post-coronavirus recovery begins.
Chinese Pollution Is Bullish for Apple
If Chinese industrial production is a bellwether for Apple’s performance, then now is the time to start loading up on AAPL shares, according to Morgan Stanley.
On Wednesday, the U.S. investment bank issued a buy rating for Apple stock on the premise that Chinese factors are ramping up again.
As CNBC reports, the bank monitors nitrogen dioxide levels in China’s air quality and considers it to be a first-level indicator of factory output.
In a note to clients, equity analyst Katy Huberty said:
Air quality data from 4 major Chinese manufacturing locations suggests that device production remains above seasonal levels which combined with build forecasts that are above our forecast point to potential for better than expected F3Q guidance
Based on nitrogen dioxide levels, Chinese industrial production is back above average, according to Morgan Stanley, which puts Apple on track to exceed its second-quarter guidance for 32.9 million iPhone shipments. If production ramps up as expected, the iPhone maker could be on pace to exceed third-quarter guidance as well.