Morgan Stanley (NYSE:MS) has named Apple (NASDAQ:AAPL) its top stock pick for the year ahead.
While the U.S. investment bank is cautious overall on technology hardware stocks, it sees upside potential in Apple, which is the largest company in the world with a market capitalization that is fast approaching $3 trillion U.S.
"Hardware stocks should underperform in ’22 as multiples derate, margins compress, and earnings-per-share revisions peak, wrote Morgan Stanley in a note to clients. "We prefer stocks with more recurring revenue and secular growth, with Apple our favorite large cap (and overall top pick)."
The call comes days after Morgan Stanley raised its price target on Apple to $200 per share and reaffirmed an "overweight" rating on the stock. That projection is 14% higher than Apple’s current share price of just over $175.
"The combination of a strong, loyal customer base and the upcoming launch of AR/VR products positions Apple for a re-rating in 2022," wrote Morgan Stanley.
Shares of Apple are up 35% this year, outperforming the S&P 500 index's 25% gain.
